Do's and Don'ts for a Smooth Approval

Tips for a Smooth Loan Approval:

• Do keep original and updated pay stubs, bank statements, investment account statements, W-2 forms, and other important financial documentation. Current supporting documentation may be required and updated prior to the closing of your mortgage loan..
  
• Do provide all documentation from the sale of your home when proceeds will be used for down payment on your new mortgage.
  
• Do notify your loan officer if you plan to receive and use gift funds for your down payment. An additional form must be completed and must accompany a copy of the check showing funds transferred to you, and a copy of the deposit slip showing the funds were deposited to your account. Specific paper-trails must befollowed, so ask your loan officer for details BEFORE transferring funds.
• Do notify your loan officer of any changes in your job, income amount, job promotion, location transfer, or change in method of income (i.e. from salary to commission).
• Do disclose all debts that you are obligated to pay if they are not being reported on the credit report (i.e. personal loans to family members or employer, property taxes on real estate where there is no debt or where owner financing “real estate contracts” occur, etc.
• Do return all original signed disclosures along with the original signed loan application to your loan officer along with the supporting documents requested for approval as soon as possible. A delay could result in a postponed closing.
• Do Not change employers or the industry in which you work without inquiring about the impact this change may have on your mortgage loan.. A second verification of employment will be conducted prior to closing to insure there has been no changes that will affect your approval.
• Do Not make any major purchases during the processing of your loan or prior to closing (i.e. furniture, a new car, major appliances, electronics, etc.). If in doubt, ask your loan officer first before purchasing anything that might impact your monthly debts used in qualifying. A second credit report will be pulled prior to closing to verify that there has been no additional changes that could affect eligibility.
• Do Not obtain and/or deposit unusually large sums of money without notifying your loan officer. FNMA/HUD guidelines require documentation as to the source of theses funds which may include a copy of a bonus check, tax refund, insurance settlement, or a gift letter as discussed above. All irregular deposits on the statement and its source will need to be paper-trailed.
• Do Not close, open or transfer any asset accounts without providing proper documentation. For example, transferring money in stock or retirement accounts to a checking or savings account would require supporting documentation. Ask your loan officer first for specific details.
  

The Clock is Ticking...
Extended and Expanded Tax Credit Expires 4/30/10
For prospective homebuyers who are on the fence about making a home purchase, the next few months represent a countdown of sorts as
huge tax credits are about to expire. Here are important details for you to know:
Tax Credit for First-Time Homebuyers (FTHBs)
FTHBs (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10%
of the purchase price of the home, with a maximum available credit of $8,000. Single taxpayers and married couples filing a joint return may
qualify for the full tax credit amount.
Tax Credit for Current Homeowners
The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes
in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five
consecutive years during the last eight years. Single taxpayers and married couples filing a joint return may qualify for the full tax credit
amount.
What Are the New Deadlines?
In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010. Those in
the military do have some special extensions on the timelines available.
What's So Great About a "Tax Credit"?
The benefit of a tax credit is that it's a dollar-for-dollar benefit, rather than a "tax deduction", or reduction in a tax liability that would only save
you $1,000 to $1,500 when all was said and done. So, if a first-time homebuyer who qualified for the entire benefit were to owe $8,000 in
income taxes and would qualify for a tax credit of $8,000, she would owe nothing.
Better still, the tax credit is refundable, which means the homebuyer can receive a check for the credit if he or she has little or no income tax
liability. For example, if a first-time homebuyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

New Disclosure Regulations

Recent guidelines from Washington have forced a change to the way that loan originators will disclose closing costs for all homebuyers. The purpose of the new Good Faith Estimate is to level the playing field for borrowers comparing loans to be able to make apples to apples comparisons for loan scenarios.

In essence, HUD is working to bring all lenders up to the same standard of excellence in reporting closing costs that we at Legacy have always adhered to, estimating realistic fees that a buyer should expect to pay at closing with no last minute surprises.

Below are some important points to know:

All fees paid to the lender/broker are to be consolidated in one line, including processing fees, origination fees, etc. These charges cannot change from the original estimate without a material change to the loan requested.


In the event fees are being charged to obtain a lower rate, these are to be broken out and itemized for the borrower's ease of comparison to other loan programs.


Estimates for fees from government recording charges and third party settlement providers we suggest are to be itemized and the lender is held to a tolerance of 10% for their accuracy. In the event the estimated charges exceed the amount listed by the allowable tolerance, the lender will be responsible for making up the difference.


Estimates for services that the buyer can shop for and do choose can change at settlement without the lender being held accountable. This can include title charges, homeowner's insurance, and initial deposits for an escrow account.