[e] KWeninger@fairwaymc.com
[p] 920-960-0852

    When buying a home or refi’ing a home there is a fair amount of paperwork that will be needed. If one does not have all of the paperwork needed, this could cause a huge delay in getting your loan approved. For starters I will need the following:
    -1 month of check stubs
    -Last 2 years Federal Tax Returns
    -Last 2 years W-2′s
    -2 months of bank statements (all pages, none Internet copies)
    -For FHA/VA/USDA loans, copy of your drivers license and social security card (s)
    -Latest IRA/401K statement, all pages
    -If applicable, Bankruptcy papers/Divorce decree/Child support paperwork


    Do not apply for any major purchase that would create debt of any kind. This includes furniture, appliances, electronic equipment, jewelry, vacations, expensive weddings……and automobiles, of course. Any new debt will have to be counted in your debt to income rations. Lenders today will do one more check on your credit report just before closing to see if any company was looking at your credit report-if there was a recent inquiry, one would have to explain it in detail of what the new debt is and show proof of the new payment or show if no new debt occurred. If new debt occurred–this could delay a closing or worse yet, un qualify you for that purchase of a home.


    When a lender reviews your loan package for approval, one of the things they are concerned about is the source of funds for your down payment and closing costs. Most likely, you will be asked to provide statements for the last two or three months on any of your liquid assets. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and even your company 401K and retirement accounts.If you have been moving money between accounts during that time, there may be large deposits and withdrawals in some of them. The mortgage underwriter (the person who actually approves your loan) will probably require a complete paper trail of all the withdrawals and deposits. You may be required to produce cancelled checks, deposit receipts, and other seemingly inconsequential data, which could get quite tedious. To ensure quality control and eliminate potential fraud, it is a requirement on most loans to completely document the source of all funds. Perhaps you become exasperated at your lender, but they are only doing their job correctly. Moving your money around, even if you are consolidating your funds to make it “easier,” could make it more difficult for the lender to properly document.So leave your money where it is until you talk to me, your loan officer.  Oh…don’t change banks, either.


    For most people, changing employers will not really affect your ability to qualify for a mortgage loan. For some home buyers, however, the effects of changing jobs can be disastrous to your loan application.
    Salaried Employees:
    If you are a salaried employee who does not earn additional income from commissions, bonuses, or over-time, switching employers should not create a problem. Just make sure to remain in the same line of work. Hopefully, you will be earning a higher salary, which will help you better qualify for a mortgage.
    Hourly Employees:
    If your income is based on hourly wages and you work a straight forty hours a week without over-time, changing jobs should not create any problems.
    Commissioned Employees:
    If a substantial portion of your income is derived from commissions, you should not change jobs before buying a home. This has to do with how mortgage lenders calculate your income. They average your commissions over the last two years.Changing employers creates an uncertainty about your future earnings from commissions. There is no track record from which to produce an average. Even if you are selling the same type of product with essentially the same commission structure, the underwriter cannot be certain that past earnings will accurately reflect future earnings.  Changing jobs would negatively impact your ability to buy a home.
    If a substantial portion of your income on the new job will come from bonuses, you may want to consider delaying an employment change. Mortgage lenders will rarely consider future bonuses as income unless you have been on the same job for two years and have a track record of receiving those bonuses. Then they will average your bonuses over the last two years in calculating your income.  Changing employers means that you do not have the two-year track record necessary to count bonuses as income.
    Part-Time Employees:
    If you earn an hourly income but rarely work forty hours a week, you should not change jobs. There would be no way to tell how many hours you will work each week on the new job, so no way to accurately calculate your income. If you remain on the old job, the lender can just average your earnings.
    Since all employers award overtime hours differently, your overtime income cannot be determined if you change jobs. If you stay on your present job, your lender will give you credit for overtime income. They will determine your overtime earnings over the last two years, then calculate a monthly average.
    Lenders like to see a two-year track record of self-employment income when approving a loan. If you have just started your business and have less then a 2 year history (need to show the last 2 years Federal Tax returns), we cannot use any of this income for qualifying for a mortgage loan. In addition, self-employed individuals tend to include a lot of expenses on the Schedule C of their tax returns, especially in the early years of self-employment. While this minimizes your tax obligation to the IRS, it also minimizes your income to qualify for a home loan.


    I will review total income coming in and debt going out for everyone looking to buy a home. All to often, we can figure in the car payment, student loan payment (s), etc, but it is the smaller ticket items that can kill a budget. For example: do you go out to eat a lot or buy that expensive cup of coffee everyday? If so, I’m NOT saying you CANNOT do this anymore, all I’m saying is to make sure you account for this in your budget. We are creatures of habit, if one buys a home and changes habits drastically, then there could be potential issues. One would hate to HAVE to eat macaroni and cheese everyday because they could not afford anything else but If you want to, that’s fine.  Some of this info is from:http://www.realestateabc.com/homebuying/donts.htm


    Do…continue making your mortgage or rent payments!
    Do…stay current on all existing accounts!
    Do…keep working at your current employer!
    Do…keep your same insurance company!
    Do…continue living at your current residence!
    DO.. call ME if you have questions, (920) 219-4200


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