Money Smarts Blog

Buying a home is more than likely the biggest purchase you’ll ever make. No pressure or anything. That’s why it’s important to have trustworthy folks by your side. Especially if this is your first time buying a home. That includes a realtor that can point out details that otherwise would go unnoticed (water pressure, for example). A home inspector that that checks in areas you wouldn’t think or know to look in. A loan officer that finds the right mortgage for you and your budget. And even a trusty friend or family member that’s done this before and can share their best advice.

When it comes to navigating your way through the loan process here are some of my best tips:

1. Decide who you want your homeowner’s insurance through. A likely choice is the same agency that provides your auto insurance since they may offer multi-policy discounts. But make sure you shop around for the best deal. Better yet, did you know IHMVCU offers home and auto insurance? 

2. Have your paperwork ready. This will help you avoid a slowdown in the process. A few items you most likely will need are:
• previous 2 years of tax returns (personal and business)
• previous 2 years of W2s
• previous 30 days of pay stubs
• previous 2 months of bank statements
  

3. Respond to your loan officer and loan assistant in a timely manner. Throughout the loan process your financial institution will ask for items needed to finalize your loan. Making sure you answer their questions or submit documents requested as soon as possible will help you meet your closing date.

4. Keep your bank accounts clean. This might sound funny, but any large deposit or withdrawal other than your regular pay check or loan payments will cause red flags. So, don’t go out and buy that Jeep Grand Cherokee you’ve been eyeing before closing on your new home.
   Also, make sure if you have cash at home, it stays at home. Or better yet, add it to your bank account at least 60 days before applying for your home loan. Physical cash cannot be used for buying a home because lenders cannot source where the cash came from. That’s why a cashier’s check is required for your closing costs (and down payment) at the time of closing.

5. Keep making your payments on time like normal. This might sound like a no brainer, but I had a home buyer stop making their student loan payments so they could save money for furniture. You do not want to do that.

6. Don't open or apply for any new debt during the process. New loan or credit card applications can hurt your score, because each one can take several points off your score. A lot of applications in a short time can add up to a lot of damage. Also adding more debt to your credit cards can drive up your debt-to-income ratio, which is another important metric that affects your ability to qualify for a home loan. Again, the fewer changes you make to your personal finances until your mortgage is secured, the better.

Buying a home is more than likely the biggest purchase you’ll ever make. No pressure or anything. That’s why it’s important to have trustworthy folks by your side. Especially if this is your first time buying a home. That includes a realtor that can point out details that otherwise would go unnoticed (water pressure, for example). A home inspector that that checks in areas you wouldn’t think or know to look in. A loan officer that finds the right mortgage for you and your budget. And even a trusty friend or family member that’s done this before and can share their best advice.

When it comes to navigating your way through the loan process here are some of my best tips:

1. Decide who you want your homeowner’s insurance through. A likely choice is the same agency that provides your auto insurance since they may offer multi-policy discounts. But make sure you shop around for the best deal. Better yet, did you know IHMVCU offers home and auto insurance? 

2. Have your paperwork ready. This will help you avoid a slowdown in the process. A few items you most likely will need are:
• previous 2 years of tax returns (personal and business)
• previous 2 years of W2s
• previous 30 days of pay stubs
• previous 2 months of bank statements
  

3. Respond to your loan officer and loan assistant in a timely manner. Throughout the loan process your financial institution will ask for items needed to finalize your loan. Making sure you answer their questions or submit documents requested as soon as possible will help you meet your closing date.

4. Keep your bank accounts clean. This might sound funny, but any large deposit or withdrawal other than your regular pay check or loan payments will cause red flags. So, don’t go out and buy that Jeep Grand Cherokee you’ve been eyeing before closing on your new home.
   Also, make sure if you have cash at home, it stays at home. Or better yet, add it to your bank account at least 60 days before applying for your home loan. Physical cash cannot be used for buying a home because lenders cannot source where the cash came from. That’s why a cashier’s check is required for your closing costs (and down payment) at the time of closing.

5. Keep making your payments on time like normal. This might sound like a no brainer, but I had a home buyer stop making their student loan payments so they could save money for furniture. You do not want to do that.

6. Don't open or apply for any new debt during the process. New loan or credit card applications can hurt your score, because each one can take several points off your score. A lot of applications in a short time can add up to a lot of damage. Also adding more debt to your credit cards can drive up your debt-to-income ratio, which is another important metric that affects your ability to qualify for a home loan. Again, the fewer changes you make to your personal finances until your mortgage is secured, the better.