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Home Loan 101


Taking out other loans
Don’t open any new lines of credit or obtain new debts until after you’ve closed on the home loan. New lines of credit or debts include auto loans, personal loans, credit cards, etc. You also don’t want to close any accounts either as that can also affect your credit.

Missing payments on current debts
Make sure you pay all your debts, especially those listed on your credit report, on time.

Racking up credit card debt
Limit your credit card usage until after you close on the home loan.

Blowing your savings
Save as much money as you can and as early as you can. You’ll need enough funds saved for your earnest money, down payment, closing costs, extra costs that come up and possibly reserve funds in a bank account for a minimum of 45 days.

Changing jobs, or taking a leave of absence
The best case would be for you to keep your current job, unless a new job will start immediately and provide significantly higher income, improving your chances of getting a loan. If a new job will not provide higher income or will not start immediately following your current job, then it’s best to keep your current job until you close on the home loan. You must also keep your hours the same on a consistent basis to avoid your eligibility being affected, and under no circumstance take a leave of absence without first discussing with your MLO.

Source of funds for earnest money, down payment, etc.
Lenders will not accept cash as a “verifiable” source of funds, meaning since they can’t tell where the cash is coming from they will not allow you to use it towards your earnest money, down payment, closing costs, cash reserves, etc. If you have money saved in the form of cash, you need to speak with your MLO prior to starting the loan process and getting a contract on a home so you can plan accordingly.

If you plan on getting money from someone else, such as family, friend, etc., in the form of a gift – something you don’t have to pay back, we will need a gift letter completed by the donor and we will need a copy of their bank statement showing they have the funds to give you. The cash rule still applies here as well, if the donor provides their bank statement(s) and the lender see’s there was a large cash deposit(s) they will question the deposit(s) and most likely not use this source of funds. You also want to discuss gift funds with your MLO as some loan programs do not allow gift funds to be used. 

Bank Statement Requirements
As part of the loan process you will be required to turn in 60-days’ worth of bank statements. The lender will review these bank statements and may ask questions about recurring transactions (transactions that occur on a monthly basis for the same amount that are not listed on your credit report – they need to verify you do not have additional liabilities not listed on the report), they’ll also ask about any deposit that is over the calculated amount they determine for each loan and you will need to provide a copy of the deposit slip, copy of the check if a check was deposited or some other form of documentation showing what the deposit was for.

When you provide your bank statements you will need to 1.) provide all pages of the statement, even if a page is a bank disclosure or blank but included in the page # count, 2.) the statement must include the information for the bank, the lender must be able to tell who the bank is, and it must also include the borrower’s name(s) as well as the account number, or at least that last few digits of the account number. An online printout of the bank statement or transaction history must include the URL at the bottom of the page.

Advantage Home Mortgage, LLC
4601 Eagleridge Place, Sutie 120, Pueblo, CO  81008
Direct:  (719) 546-3100
Fax:  (719) 546-3103
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