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Tips to Present a Stronger Mortgage Application

Everyone keeps talking about how hard it is to get a mortgage with todays tighter lending standards. Many people actually disqualify themselves without even talking to a mortgage professional! But with both money and houses on sale, now is a really great time to buy. In fact, 8 of 10 homeowners would say now is a great time to buy a home.

So if you are thinking about moving up, moving down or just taking advantage of ridiculously low interest rates, here are some tips to help you present a stronger application.

1. Income Documents

Most lenders want to see a full month of paystubs and the last two years complete Federal Tax returns. If you are on a pension or social security, they will also want to see the award letters. Assembling them ahead of time and holding on to every paystub you get is a good idea even before you find a home and/or submit your mortgage application because it will save you time later.

2. Asset Documents

Most lenders will scour your bank accounts for the two months prior to going to contract. They are looking for irregular deposits outside of your normal income. So if you sold a motorcycle, have a paid receipt and motor vehicle documents in place. Get a gift? You will need a gift affidavit, proof of the donors ability to transfer funds. You will need all pages of each bank account, even the ones you usually throw away. If you are purchasing, they will be looking to make sure you have the down payment and closing costs funds liquid or a paper trail once you have accessed them.

3. Credit Score Optimization

Lenders have now put a price on your credit score and it can be as much as 2%-3.5% depending on your score. That means to get the same interest rate as someone with excellent credit it could cost you 2%-3.5% of your loan amount in points. Do your best to curtail the use of credit as it relates to your available credit lines. Target less than 30% of usage of available lines to get the best scores. Do NOT cancel credit cards. Do not open any 0% interest rate cards. Dont do anything that will require having your credit run without first discussing it with a mortgage professional who knows the impact it could have. If you are unsure of your credit score, go now and get it run so if you have some cleaning up to do, you have time to get it done.

4. Appraisal Concerns

It is unlikely you will make an offer to purchase without checking out comparable home sales. Its also likely you received that type of data from the real estate agent you are working with. Make sure your agent prepares the same information for the appraiser. Data about similar sales, similar homes currently on the market and maybe even cost estimates for any repairs or improvements anticipated can preempt future problems with appraised values and conditions.

Overall, it is recommended that you hold onto copies of everything financial. Think before allowing your credit to be run and work with an agent and mortgage professional who can use their experience to put your loan application in its best possible light as soon as you start thinking about buying a home.

Active Adults Realty and Gail Alm are just such a team to make sure you are well positioned to having a smooth mortgage and home buying experience. If you have any questions about any of the tips above, please give me a call at(302)260-7088 and I can explain further. Its is a great time to buy a new home, let us help you put your best foot forward.

Gail Alm is a Certified Mortgage Planning Specialist who provides a comprehensive mortgage plan with an array of options that will allow you to determine the strategy that best helps you accomplish your goals.

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