5 Things to Never Hide from Your Mortgage Broker
With rent prices on a steady incline, you have finally decided to make the move to purchase a home. You’ve saved up enough for a sizable down payment and you just made an offer that was accepted on your dream home. That means it’s time to start the mortgage process.
Before you do so, it’s important to understand that your mortgage underwriter is going to be looking very closely at your finances. They are tasked with looking into your income, your personal assets, any debts you might have, your credit score, and more. This will give them a well-rounded picture of whether you are someone they want to give a loan to.
For a lot of people, it might feel like your mortgage broker is asking you to divulge every little detail about your life. In most instances, they are. They are doing their due diligence, so it’s important to be as open as possible to avoid any missteps in the process.
Here are five different things that you should never hide from your mortgage broker.
As you go through the mortgage approval process, your mortgage broker is going to want to see tax returns from the previous two years. This will allow them to get a better understanding of what your income has been. In addition, they will ask you to give them bank statements for the previous two months. They are looking for a steady flow of income. Try to avoid having any large deposits during this time. If you do, don’t try to hide them, but instead be prepared to explain exactly what they are for. All they are trying to do is make sure that you have the current income to be a good borrow and that you’re not relying on any outside cash flow.
Divorce and Child Support
While you might not think disclosing a divorce or child support is important to buying home, you would be wrong. If you have been ordered by the court to pay child support or alimony to a past spouse, then that could very well affect the money you have to pay your mortgage.
One of the biggest no-no’s when purchasing a home is making a large purchase while you are going through the process of securing a mortgage. Stay away from taking out other debts such as a car loan or even a new credit card. Car loans will increase your debt-to-income ratio, which will be a negative factor in the eyes of your mortgage broker. It will end up lowering your buying power, which could make it difficult to receive the loan you are hoping for. Even if you are still approved, you could face a higher interest rate. The car can wait for a month until your mortgage closes.
Plan for Your Down Payment
Your mortgage broker will need to know where the funds for your down payment are going to come from. It’s crucial that they can see proof that the funds are in place and accessible. Depending on your broker, they might need you to verify multiple times during the whole process. They need to make sure you don’t use the funds before you reach closing.
While your past addresses might not seem like a big deal, they can actually cause you quite a headache if not accurately reported. Because your mortgage broker will be looking through past tax returns, you will need to make sure any addresses that you used with the IRS or that are on your pay stubs are also stated on your mortgage application. If there are any discrepancies, then it could cause a delay in closing.