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April 28, 2011

5 Tips for Avoiding Home-Buying Loan Drama

Getting a loan in 2011 is no easy feat. Aside from generally needing a minimum of 20% down and stellar credit, there are some hotspots to watch out for. Here are five tips for navigating the current loan landscape, courtesy of my friends at Guarantee Mortgage:

1. Be prepared to provide asset documentation twice in the process. In the good old days, furnishing the lender with two months of statements showing current balances was acceptable. Now, the lender will expect to see your latest statements at closing time. They’ll want to see all deposits, and verify that they’re legitimate payroll deposits. And they’ll also want to confirm that you still have all the liquid assets necessary to close.

2. Expect the lender to run your credit report twice. A credit report was previously run by the lender at the time a buyer’s loan package was submitted. However, lenders are now running reports at the time of loan funding to ensure that you have no new debt, disputes or derogatory credit issues.

3. Your employer’s going to get a call. Paystubs verifying your employment are no longer enough. Expect the lender to call your employer at the time of funding to make sure you’re still employed.

4. Tax returns will need secondary verification.  Lenders are no longer satisfied simply referencing the copy of your tax returns provided in the loan application package. They now want an electronic recap from the IRS.

5. Unwarranted spaces can be an issue. This sort of thing wasn’t a showstopper in the past. If you’re buying a house with an “illegal” or unwarranted space, it’s key to let your lender know about it. It will be important for your lender and Realtor to work together to address the details so you can avoid a loan crash.

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