In this article, Hometown Lenders – with locations across Kentucky (KY) and Tennessee (TN) – provides tips to help you sort out your records in order to make the home buying process easier and less stressful.
Prior to applying for a home loan, it is important to recognize your financial weaknesses beforehand. Mortgage lenders carefully review your finances when deciding whether to approve or deny your request for a loan. The lender takes such precautions to ensure that you have enough money to cover a down payment and closing costs, but also to make sure you can routinely make your monthly payments. This is why it is critical to make sure your records are in order first.
There are several
warning signs on your bank statement that can cause lenders to be apprehensive. One indication of trouble is overdraft charges. Included in the lender’s evaluation is usually the last two months of your bank statement. If they see a continuing pattern of overdraft charges, it will make them assume you are not a good borrower. They will think you struggle to manage your finances and likely deny your application.
Lenders also see a red flag with large deposits. They find lump-sum or irregular deposits on bank statements to be very questionable. They find this to be suspicious because the funds can appear to be coming from an improper or illegal source. Unless an acceptable explanation is supplied, the lender is likely to disregard those funds and only apply your remaining money to their assessment.
They also find it worrisome if there are signs of your parents. If they discover you have automatic monthly payments to a person rather a bank, the lenders can view this as a non-disclosed credit account. This can be the case if you take out a loan through your parents and make payments to them instead of a bank. The best way to gain approval for a mortgage is to have consistent, tracked payments.
Prior to completing a loan application, it is a smart idea to begin the organization process of your bank statements and activity. It is beneficial to have your financial information sorted out before you are searching for a home in the event you find your dream home and have to move quickly.
Keeping accurate and organized records is a critical part of preparing financial statements, disputing claims and errors, proving to lenders you can make monthly payments, and confirming your income sources.
The easiest way to access and organize your records is to place them in separate files arranged by category and year. You should also always check that your records are completely accurate. If any issues are not corrected, it can have a negative impact on your ability to purchase a home. Records that should be saved for buying a home include taxes, bills for larger purchases like jewelry and electronics, bills for utilities for that year, home inventories that are updated every six months, and information regarding a property you have sold until the period of limitation expires.
For assistance in
home buying or refinancing, Hometown Lenders is here to help. Our office is dedicated to simplifying the
process and making it more enjoyable for clients. We have multiple locations
across Kentucky and Tennessee, including Lexington, KY, and we proudly serve
the surrounding area. Please call us today at 859-475-1323
