HINTS TO HELP WITH YOUR MORTGAGE LOAN APPROVAL
Through telephone calls and e-mail we receive many questions from home buyers about searching for a home, financing a home purchase, Maryland or Virginia demographics and a thousand other questions. We’ve kept a record of questions from the past several months.
You might find the answer to a question you have below. If not, just contact us about buying a home in Maryland or Northern Virginia and we’ll try to help.
SHOPPING FOR A NEW CAR
GIFT MONEY FROM PARENTS
CHANGING JOBS PRIOR TO BUYING A HOME
HOW TO SELECT A LOCATION FOR YOUR NEW HOME PURCHASE
Q. Is it O.K. to buy a new car before I buy a home??
A. If you have made loan application to buy a home, you should delay any major purchases until after settlement.
Q. How would the lender know?
A. The mere act of SHOPPING for a new car might be recorded on your credit report. New car dealers (used dealers also) routinely ask for a driver’s license to permit a test drive. With the driver’s license, they often, without your permission, pull a quick credit report. This will be recorded on your credit report as an INQUIRY and may cause your mortgage loan to be denied. At the very least, you’ll have to write a letter of explanation.
Q. Why does the mortgage lender care if I’m shopping for a new car?
A. Most home buyers are buying a home within certain loan limits based on their income and a percentage of that income as debt. If the lenders thinks that you might also be buying a new car, you might not qualify with the additional debt. Best to wait until after settlement.
Q. My parents are going to give me $10,000 to help with my down payment. Should I deposit that money in my bank account?
A. It depends on when they plan to make the gift. If your parents give you the money several months prior to making your home purchase, you will want to let the gift money “age” for at least 4 months prior to making loan application.
Depending on the amount of your down payment and the type of mortgage loan you plan to use, your lender may require that you have a percentage, usually 5% of the purchase price, of your own money. While the $10,000 will surely be welcomed, you must show that you have the required down payment without including gift money. So, if a gift is made, it should be in your bank account for several months. When you make a mortgage loan application, your lender will require 2-3 months prior bank statements. The money must be included in your bank balance statement for the oldest month.
Q. I need the gift money from my parents for my down payment. Why does the lender care where my money came from?
A. Lenders are under a great deal of scrutiny by the government to “source” large deposits of money. Any large deposits will have to be documents carefully to show a good paper trail of money movements.
Q. I have been offered a job with a good pay increase. Can I take it even though we have already made loan application?
A. As long as you still qualify for your mortgage loan, which with a pay increase, you would, it is usually not a problem when a borrower changes jobs, as long as the job is in the same field.
Q. I have a new job and my employer wants me to start two weeks after my home is due to settle. Can I still go through with the purchase?
A. Probably. However, your mortgage lender may require that you provide them with a pay stub showing that you have started your new job prior to settlement. This may cause a delay in settlement, but only until you receive your first pay check. This is often the case with relocating home buyers.
Q. I would like to buy a home close to my job location. How do I know if it is a good area for investment?
A. Your agent will be able to provide you with historical sales data for the area or areas of your choice. You’ll want to review sales in the area for the similar time frame the year prior to your home search. Real estate trends are available and experienced agents can provide you with them as a part of their normal buyer’s services.
Q. What makes one location a better investment than others?
A. Market demand for particular locations is generally based on public school rankings, accessibility to public transportation, proximity to good commuter roads, distance to the work location, local demographics and personal needs such as medical, etc.