Read This BEFORE Applying For A Loan

Dated: 06/19/2018

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Things to Avoid Before Applying for a Loan

There are circumstances to avoid doing before applying for a loan during the loan process itself. Any one of the items listed below can greatly impact your ability to qualify for a mortgage loan. It is important to avoid doing any of the following until AFTER you have closed on the purchase of your home.

Don’t make any major purchase.

Many consumers make the mistake of buying new cars, furniture, etc. without realizing the impact of the purchases. Lenders look closely at your debt-to-income ratio. A large-payment purchase can greatly impact those ratios and prevent qualification for a home loan.

Don’t increase the balance owed on credit cards.

If the new purchases increase the amount of debt you’re responsible for on a monthly basis, there is a possibility that this may disqualify you from receiving a loan.

Don’t move assets from one bank to another.

These transfers show up as a new deposit and complicate the application process. You must then disclose and document the source of funds for each account. The lender can verify each account as it currently exists. You can consolidate your accounts later if you need to.

If possible, don’t change jobs.

A new job may involve a probation period which must be satisfied before income from the new job can be considered for qualifying purposes. A new job may pay commission, overtime, or bonus income versus a guaranteed salary and if so, you must have a minimum of one to two years’ history before you can use it for qualifying.

Don’t run your own credit report.

This will show up as an inquiry on your lender’s credit report, inquiries can lower your credit score. All inquiries must be explained in writing, i.e. do you have new and more debt?

Don’t attempt to consolidate bills or pay off debts before speaking with your lender.

The lender can advise you if this needs to be done.

Don’t pack or ship information needed for the loan application.

Important paperwork for your home loan, such as W-2 forms, bank statements, divorce decrees, and tax returns should not be packed with your other household items. Finding copies could take weeks and delay the closing date on your new home.

Information for Your Mortgage Application

Unsure of what you need? Here’s some helpful tips!

If it applies to you, be prepared to provide the information listed. If you do not know the type of loan you will receive, bring items needed for all loans and be prepared to supply additional information within a few days.

All loan applications

  • Pay stubs for the last 30 days.

  • W-2 forms for the last 2 years.

  • Bank statements for the last 2 months.

  • 401K or other employment related retirement account statement(s).

  • Investment account statements for the last two months. (Stocks, bonds, IRA’s, mutual funds, etc.)

  • Name, Address, Phone number of landlord for the last 24 months.

  • Name, Address, Phone number of employer(s) for the last 24 months.

  • Application deposit check to pay for certain closing costs. (This will be credited back at closing)

For the following loan types, some additional paperwork is needed

    FHA Loan- Driver’s License – Social Security Card

    VA Loan- Provide each of the following:

        VA Certificate of Eligibility

        Form DD-214 or for in-service veterans the Statement of Service

        Most recent Leave and Earnings Statement (in-service only)

        Name and Address of child care provider (if applicable)

Additional forms are necessary for the following financial or personal circumstances. Self-Employed (includes rental income) -Signed copies of personal and business

  • Federal Income Tax Returns for the last 2 years and year to date Profit and Loss Statement Balance Sheet (self-employed only).

  • Declared bankruptcy in the last 7 years? Signed copies of Petition/Decrees, schedule of creditors and discharge notice and a letter of explanation for filing for bankruptcy.

  • Divorced? Signed copies of all divorce decrees, including stipulations or modifications and receipt of child support payments for the last 12 months (only if using income to qualify)

Miscellaneous Circumstances

If you graduated from college during the last 2 years, bring a copy of diploma and transcripts.

If you were unemployed for 30+ days during the last 2 years, have a letter of explanation.

If you are receiving a “gift” for part of your payment, talk with the loan officer prior to transferring funds.

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Anna Cromwell

Hello! I’m a Broker Associate/REALTOR® specializing in buyers moving in Denver, Colorado. I’m an Arizona transplant, and have lived up and down the west coast from San Diego to Seattle. I have fo....

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