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When searching for your first or next house, it is vital to ensure you’re
putting your best foot forward so you can land your dream home.
Here are some key dos and don’ts for the mortgage process and purchasing a
home.
Do: Build Your Homebuying Team and Maintain Consistent Communication
One of the first steps you should take in your homebuying process is
building the right team
for you. Start by identifying the lender you want to work with for
financing your home. Look for a lender with local knowledge and
decision-making capabilities that also offers the right mortgage options for
your situation, such as
first-time homebuyer programs.
It is also important to identify the right real estate agent to meet your
needs, one who has the right relationships and knows the area where you’re
house hunting.
Don’t: Liquidate Your Savings
Purchasing a home is one of the largest purchases many consumers will make
in their lives. Outside of obtaining a mortgage, you will also need to
ensure you have enough saved to cover your downpayment, closing costs, fees
as well as potential reserve funds, all of which are required to be verified
in advance of closing.
Making major purchases like buying a car can reduce your available funds for
closing. It is also important you don’t move large sums of money without
documentation, as lenders will review your financial statements to ensure
you can afford the payments, and deposits and transfers may be questioned as
part of the process.
Ensure your savings are in order and you have a paper trail for assets that
will be requested by your lender. If the funds for closing are coming from a
non-liquid source, such as gifts,
home equity lines of credit (HELOCs), or investment funds, the money must be moved in advance (typically a week)
of closing.
Do: Watch Your Credit Usage
Even after you’ve received pre-approval for your mortgage, it is important
to monitor your credit and spending carefully. Avoid taking out new loans or
opening credit cards before and during the mortgage process, as these
additional liabilities may have a negative impact on your qualifying
debt-to-income ratios.
For your existing credit lines, pay off your balances in full each month
whenever possible and don’t close lines of credit as this can impact your
credit score.
And while it may be tempting to buy new furniture or appliances for your
dream home while you wait to close, it is important to hold off on these
purchases until after closing to avoid potential negative impacts on your
mortgage process.
Do: Research Available Homebuying Programs
There are a variety of programs out there to help achieve the dream of
homeownership.
Some lenders offer
first-time homebuyer programs
as well as affordable mortgage programs
designed to assist with upfront costs, help individuals and families of
varying income levels find an affordable home through down payment and
closing cost assistance, and more. Work closely with your lender to see what
programs they have available to meet your needs as well as what state,
local, and federal programs there may be that can help you.
Do: Limit Employment and/or Income Changes
As part of your mortgage process, your employment and income will be
reviewed. During this time, it is important to avoid changing jobs or
retiring, when possible, as any changes or removal of income may have a
negative impact on your qualifying debt-to-income ratios.
Do: Keep Good Records and Have Your Documentation Ready
The mortgage approval process requires your lender to verify documentation
related to income, employment, debt and other obligations. As documents are
provided to the loan team, additional supporting information may be
requested, which is why it is important to keep good records and have your
documentation ready to avoid delays in your formal loan approval, and
subsequent settlement date.
Do: Ask Questions
Your lending team is here to support you throughout the loan process and
answer any questions you may have. Don’t be afraid to ask plenty of
questions along the way to help you work together to secure your dream home.
About the Author – Jeffrey M. Ruben
Jeffrey M. Ruben is the President of WSFS Mortgage. He joined WSFS
through its acquisition of Array Financial, a full-service mortgage banking
organization, and Arrow Land Transfer in August 2013. Jeff formed Array and
Arrow in 2005, having previously held senior executive roles at financial
and legal institutions. Jeff is also a licensed real estate attorney.
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Jeffrey M. Ruben, President, WSFS Mortgage
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