|Buying a house with ease
Buying a house these days can be a sound financial decision; low interest rates, plus low house prices, makes buying a house today something within the grasp for many families. Buying a house with ease can be done…the process does not have to be drawn out or stressful.
First, gather all of your financial information together and here’s what to do:
Income info for last two years
This means providing your mortgage lender with two years of your federal income tax returns. If you are self-employed, the mortgage lender will also need a copy of your business license, as well as a letter from your tax professional stating you filed self-employed tax returns for the last two years. You will also need to gather your W-2s for the last two years from your employer. The most recent pay stubs for the last 30 days must also be provided.
Additionally, if you have a seasonal job or any other job where you take unemployment as part of the job, this has to be documented and whatever information you provide with regards to income, needs to be backed up with the verification of employment.
The verification of employment is done by your mortgage lender when you’re buying a house to make sure the income you provided matches and to make sure you’re actually still employed. Most lenders do a verification of employment at least three times during the loan process with the last time being right before final loan documents are drawn.
Assets used for qualifying
Bank statements are going to be required for the last two months for any accounts where assets are being used for loan qualifying purposes or used for cash to close on your transaction. This also means a 401(k) statement, as well as retirement account statements for the last two months (or the last two quarters if the account is quarterly). Sometimes retirement accounts are even annual - in which case, the annual statement would need to be provided.
If there is a “gift” being used when buying a house, the mortgage lender will require a bank statement and a letter from the person giving the gift so you can buy your house and the lender can have their paper trail needed for origination purposes.
Credit plays a part
Make sure you’re paying your bills on time. This goes without saying, but there is a surprising amount of people that don’t do this regularly. If you have high credit card balances and are unable to pay the balance off, go to your credit card companies and ask them to increase your line amounts without credit inquiries. Ask them to increase the line limits on each of your credit cards based upon your good payment history. Not all credit card companies will do this so you can buy a house. However, many will.
If you have any auto loans, consider refinancing them. Interest rates, not only on mortgages but also on auto loans, are presently very low. If you can save $75 a month by refinancing your auto loan, do it. It might just help you qualify with a lower payment so you can take on a house payment you’re looking to afford.
Scott Sheldon is a local mortgage lender with over six years of experience helping people purchase and refinance primary residences, second homes and investment properties. Visit him at www.sonomacountymortgages.com.