It is essential when you prepare to buy a home that you monitor your spending and keep a clear record of all monies coming and going from your bank accounts. With today’s lending you need a paper trail for everything. If the lender sees a discrepancy on your bank statements, you will have to clarify the issue and explain with great detail what it is all about.
It is harder then ever to get a mortgage today. Lenders look at everything and will question anything. One key point to keep in mind is to make sure all the funds in your accounts are “source-able.” By this I mean you cannot have mysterious deposits into your account with no documentation as to where they came from or how you received them. You must have pay stubs, receipts, etc., or the lender will not count this money as source-able or include it as funds toward your closing costs. During the time your loan is being processed and you’re waiting to close on your new home, do not go out and spend a large amount of money on anything. Do not buy a new car, get a loan for new furniture, deposit money into your account with no records available as to where you acquired the money. Buy only necessities during this time. Everything else can wait.
Simple credit tips to boost your score:
- Have a variety of credit such as an installment account, revolving credit, credit cards (a few, not a lot!).
- Do not borrow more then 30% of your credit limit on credit cards.
- Charge small amounts to your credit cards, but pay them off in full at the end of each month. Keeping an account inactive for 3 or more months can bring down your score.
- Do not close out old accounts, even if you do not use them. This will affect your length of credit history, and can hurt your overall FICO score.
Keep in mind that a few days before closing on your new home, your lender will ask you for your latest bank statements, pull your credit report again, and verify your employment. If anything has changed, you could end up being denied financing and lose out of your new home.
Next week: What you can do to help your home sell faster.
