Do's & Don'ts
Make sure nothing gets in the way of achieving your home financing goals. Some "Don'ts" may seem obvious, but others not so much. Check out this list to make sure you avoid the basic mistakes during the process of refinancing.
DOask donor(s) for gifted funds as soon as possible, if being used towards your down payment. Be sure to ask your Loan Officer about the necessary steps and documentation for gifts.
DOstay current on your payments. If you’re looking to refinance, make sure you’re still paying your mortgage on time; one late notice may invalidate your loan approval. The same goes for car payments, credit cards, student loans, and any other debt.
DOcontinue to use your credit as normal. Changing your pattern may raise a red flag, causing your credit score to go down.
DOwait to make a major purchase such as a new car, boat or appliance until after your loan has funded.
DOkeep copies of all important financial documents: check stubs, W-2s, tax returns, bank and investment account statements, rental agreements, etc. If asked to provide any of this info, you’ll be ready!
DON’Tkeep cash in a safe or an overseas account if you plan to use these funds as a down payment. Inquire about how and when would be the best time to put funds into your U.S. bank account if needed.
DON’Tclose credit card accounts. Keeping accounts open after you have paid them off lowers your debt-credit ratio. If you close a credit card account, it may appear that your debt ratio has gone up.
DON’Tapply for new credit or give your personal information to anyone else who might run your credit report. Multiple credit inquiries may hurt your score.
DON’Tmake career moves. Your mortgage lender must verify your employment, so it’s crucial to maintain your employment status.
DON’Tmake large deposits into your bank account unless 100% necessary. If you must, save the documentation showing where the funds came from.
Determine how your credit looks.
So you that you are prepared, know that lenders will look at your payment history, income, and current debts to determine how likely you are to make your loan payments each month. The number value assigned to your “loan worthiness” is known as your credit score, and is one of several factors in getting approved for a mortgage.
There are many websites that allow you to quickly check your credit & credit score for free.
Two of our favorites are www.freecreditreport.com and www.creditkarma.com.
If you have a credit score below 640, consider delving deeper into your report to make sure it is accurate. Stay current with all monthly payments and reduce debt where possible to boost your score. If your credit score is lower than lenders prefer it to be, it's not over for you!
Talk to an expert at iCovest Capital about your financial history, goals, and the path to buy a home, they can help you in more ways than just quoting you a rate for the day. Our loan specialists can set you on the path to improve your credit, consolidate debts, remove obstructions and/or negotiate with the lender and much more to help achieve your goals!