If you are thinking about buying a home or refinancing your current residence, you will be dealing with a company that will want to verify that the property is worth the amount applied for and that you will be able to repay the loan. This means paperwork…lots of paperwork. It is easy to get confused during the process.
It is very easy to get overwhelmed and errors can happen. Sometimes people think that mistakes will be overlooked. That is very unlikely. Here are some of the more common occurrences and how to avoid them.
Income
People who are self-employed or work on commission will sometimes overestimate their projected income. Estimates of expected overtime payments, or including the overtime as part of their main salary also occur. When the underwriters look at your pay stubs and tax returns, all will be revealed.
Also, if at all possible, don’t change jobs mid-application process. Lenders like to see steady employment of at least six months to satisfy themselves that you are a good risk.
Information
The mortgage lender will ask a lot of questions and expect true, complete, and correct information in return. Withholding information is considered fraud, a crime. Your loan officer is there to help and if you have any questions, ask that person for clarification. You will need to reveal any liens, debts, judgements, income tax due, and other financials. In the long run, the potential lender will find the information, so you might as well just provide it.
Home Value
It is nice to believe that you have the best house on the block or that you have maintained your property significantly better than your next-door neighbor. However, when you apply for refinancing, it will be the opinion of the appraisers that will determine the value. If you have looked at the comparable prices of the other homes around you but indicate a higher amount on your application, it probably won’t fly.
Extra Debt
After you have submitted paperwork for a new home loan, you find that you want or need new major appliances. Making a major purchase or applying for new credit before the loan is finalized can mean re-application and approval as well as a lesser amount at the final closing. Wait until you have completed the re-fi and then reassess your budget about new purchases.
Timeliness
With all of this in mind, get all of the information to the broker or lender in a timely manner. Do your best to give them complete documentation, the full report not just the top page, and within the time frame they would like it. It just could accelerate the process and get you the money sooner.