Buying or Refinancing a Home

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4 STEPS TO PREPARING FOR A HOME PURCHASE OR REFINANCE

It is comforting to know that while there are many different ways to proceed with the loan process, some are more efficient, cost-effective and stress-free than others. The following outline was provided as a courtesy of Senior Loan Consultant, Jennifer Ellison with Summit Funding. This is an ideal approach to qualifying a buyer for a loan.

STEP 1:  YOUR CREDIT

Your credit worthiness is determined by both your FICO score AND the debt you carry.

TIPS:
  • Meet with a mortgage professional and run your credit report. It's FREE.
  • Pay down credit card debt first, before paying down of mortgage debt.
  • Don't be late on any of your payments. Even just 30 days affects your FICO score negatively - 720 is the magic number.
  • If your credit isn’t at this optimal number, work with your lender to create a Credit Repair Strategy . A lender who is dedicatd to your long-term success will  guide you through this process.
STEP 2:  YOUR ASSETS

Assets include both the down payment/cash to close fund AND reserves. Assets can take many forms, ie. savings accounts, gifts from relatives, stock/mutual funds, borrowed funds from retirement.

TIPS:
  • Identify your source of funds for the down payment early in the process.
  • Select one account that will be used as your "down payment account"
  • Except for payroll deposits, try to limit deposits into your identified "down payment account". Large deposits in bank accounts require an explanation and supporting documents
  • Speak with family members NOW regarding potential down payment gifts.
  • If borrowing retirement funds for down payment, research the terms of repayment NOW.

STEP 3:  YOUR INCOME

Income, job history, and stability are important aspects of credit worthiness. Two years of employment history will be needed.

TIPS:
  • Make sure a trusted mortgage professional reviews your income/job history
  • File your 2012 tax return if you haven't already
  • If planning an early retirement, make your home purchase before informing HR
  • Keep copies of all income documents (pay stubs, W2s)

STEP 4: PULLING IT ALL TOGETHER

This is the most critical step of all. If your loan package is not perfectly managed your loan will not close on time, and even worse, not close at all. To avoid frustration and loss of time and money, seek the counsel of a mortgage professional with experience, knowledge and a proven track record of closing escrows and refinances on time.

Whether you're just starting out in life, recovering from these tough times and starting a new, or moving up into your next dream home, having a thoughtful, comprehensive plan will increase your chances of meeting your real estate goals and objectives.

 

 

 
MONICA LENCHES REAL ESTATE  |  805.689.1300  |  www.monicalenchesre.com  |  monica@monicalenchesre.com