Here are some important factors to consider when purchasing a home.

CREDIT

1.) Everyone knows credit is important. Its true that you can still purchase a home with credit scores down to 580, but you want to get your score to at least 680, because this allows you to get a better interest rate.

2.) A common mistake first time home buyers make is purchasing a new car prior to purchasing the home, another mistake is purchasing the furniture for the new home prior to closing on the home. Both of these issues will increase your debt ratio and reduce the amount of the loan you will qualify for.

INCOME

Regarding income, here is an area that causes a lot of complications for borrower's in underwriting.

1.) You may have 1 or 2 borrowers that both have an excellent paying job, they may also have a business they are starting or some real estate that they own. They often take a loss on this business or real estate to reduce their tax liability, unfortunately this reduces the income that can be used to qualify for the loan. The underwriter is going to take the AGI number on the tax return and average over 2 years. This is the number that will used to calculate your debt ratio. Borrower's are often surprised when their loan is denied due to debt ratio, because they weren't aware of how their debt ratio is calculated in underwriting.

ASSETS

A common mistake made by First Time Home Buyers is calling in the loans from all their friends and family that owe them money and depositing cash in to the account.

1.) All deposits over $500.00 will require documentation proving source of the funds. All deposits that can't be sourced will not be used in calculating qualifying assets to be approved for the loan. This can be a big deal on a purchase if you need $18,000 to close and the underwriter indicates only $13,000 can be sourced, the loan would be denied due to insufficient cash to close.

2.) Another reason that loans are declined are too many NSF on the bank statements. Loans are routinely denied for financial mis-management by borrower.

To ensure you have a smooth closing from loan application to closing, make sure your loan documents are reviewed by an experienced loan officer. This will ensure you properly prepared prior to loan submission.

Please offer any comments regarding this information.

If you have any questions, please contact me at 877-484 -4184.

Kindest Regards,

Calvanaugh Hoskins