Don’t look now but spring is just around the corner. And we all know what spring brings. That’s right—new listings and home buyers! Well, spring sure brings a lot of wonderful things, not to mention warm weather, but it’s also considered the start of home buying season. Why? Well, there are a variety of reasons but one of the main ones is buying and moving during the summer before school starts. Buyers may also sit on the sidelines during the cold winter months and hold off trudging out into the snow and wait for more pleasant weather. Are you one of those? Are you going to buy a home during buying season? If so, here are a few tips that will make your loan process a smooth one.
Check Your Credit
How’s your credit? Most people have a general idea as to the nature of their credit but if you haven’t checked your credit report lately, you should. Not necessarily because you want to confirm the status of your credit profile, although that’s a good thing, but to see if there are any mistakes on your report. It’s no secret that credit reports are rife with mistakes ranging from a wrong address to having someone else’s bad credit show up on yours.
You can get a free copy of your credit report at a number of free online services, including www.annualcreditreport.com, a service provided by the three main credit repositories, Equifax, Experian and TransUnion. One more tip? If you do find a mistake, contact your lender and document the error. While you can certainly file a dispute on your own, properly documented, your lender can take the error off in as little as one day, something that could take you several weeks to complete on your own.
FIle Your Taxes
Getting prepared financially first means making sure your income taxes are filed, especially if you’re self-employed. Lenders need to see at least two years of the most recent income tax returns for self-employed borrowers and if you need last year’s income to help qualify, get your return in early. Lenders can’t use that income until the IRS says the file has been received.
Obtain A Pre-Approval Letter
Make sure you get your preapproval letter from an experienced lender. There are several loan choices out there and you need to know every option. Your chosen lender will provide you with a preapproval letter after receiving and reviewing your loan application along with supporting documentation. Don’t worry that you don’t yet have a property picked out, your lender can provide a preapproval letter without one. Be prepared to provide your most recent pay check stubs covering 30 days, your two most recent W2 forms, two years tax returns if needed along with copies of your most recent bank statements. After submitting your application and documentation, your preapproval letter should arrive within one day.
At this stage it’s very important to just stand pat. Don’t change anything. Don’t change jobs. Don’t apply for new credit. Document all your deposits and verify the source. If something significant has changed since receiving your preapproval letter, it’s possible you could experience significant delays.
It’s a perfect time to get ready for home buying season. Follow these inside tips and have fun shopping!