Buyer Tips and AdviceMortgage Knowledge

Grow your chances of becoming a homeowner

Your hOme

What do you need to do to grow your chances of becoming a homeowner?

There are four basic things you need to pay attention to if you want to grow your chances of becoming a homeowner.

Assets:

The source of the down payment and closing costs must come from an acceptable source.  You can use savings, checking, investments and retirement accounts for your down payment and closing costs.

The use of gift funds can be used as long as they are allowed under the loan guidelines for the program you are applying for.  You also need to be aware that all funds have to be documented.  Under the Anti-Money Laundering Act, lenders are required to document all deposits.  You will need to provide an explanation and backup documentation for anything that is not obviously a payroll deposit.

Income:  The income used to qualify for a loan must be considered to be stable.

Are you counting on your overtime, bonus and/or commission income to qualify for a new loan?

Your lender will need to verify that you have a 2 year history of receiving the income and your employer will need to confirm that it is likely to continue.

Are you self employed or itemize your deductions on your tax return?  Your lender can only use your net income if you are self employed.  Any employment related expenses that you write-off on your tax returns will be deducted from your qualifying income.  Keep that in mind as you try to figure out a way to pay Uncle Sam a little less. You might save on taxes but you might also delay becoming a homeowner.

Employment:  Like with income, your employment needs to be considered to be stable.  That means that you should have at least a two year history of working in the same field- schooling can be used to establish a two year history in certain situations.

Want to become your own boss? The plan on not trying to qualify for a loan until you can show 2 consecutive years of tax returns showing your self employment.

Feel like making a career change?  If your new job has nothing to do with the field that you have been working in or you did not go to school for the new position, then plan on waiting a bit before you can be approved for a home loan.

Credit- Ah, the one thing that can make or break your chances of becoming a homeowner regardless of how much money you make or how much money you have in the bank.

Minimum credit requirements must be met based on individual loan programs.  There is no way to get around this unless you decide to apply for a private money loan.

All debt listed on your credit report will be included in determining if you can qualify for the loan that you are applying for.

Did you co-sign for someone on a loan? It may be possible to exclude the debt IF you can show 12 months of cancelled checks proving the other party made the payments from an account that you are not on.  Is that loan only in your name? Bummer, then you have to qualify with the debt.

Open collection accounts will also need to be settled before you can close on a home loan.  Same goes for judgments and liens.

Bottom line:

Becoming a homeowner means have a steady stable job with steady stable income, paying your bills on time, not over extending yourself with debt and planning on only using funds from allowed sources.

More questions?

Email me!  laura@sdhomeloans.net

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