For Home Loan Applicants, The First Step is Stability
For many buyers, getting a home loan is central to the purchasing process.
Above all, Terrie Cox advises clients to maintain stability before buying a home. Don’t start or quit a job, change marital status, take out personal loans or rack up debt. This may seem counter-intuitive, since buyers often search for a home in response to life changes and may be eager to purchase furniture or appliances. Loan underwriters prioritize consistency, so it’s important to build a steady financial reputation.
Similarly, if buyers receive a large amount of money ahead of a purchase (i.e. cash gift from a parent for a down payment), document it with a gift letter. It should state:
- Giver’s name, contact information, relationship to the buyer and signature
- Gift’s amount and transfer date
- Giver’s statement that they don’t expect repayment
- Address of intended property
Terrie suggests organizing two years of tax information and bank statements from the past 30 days. Especially be aware of net income, credit scores and histories, existing debt and progress on payoff, and total assets. This will help you avoid surprises during the underwriter’s assessment.