Stay away from making any other large purchase of any kind — especially a new car. Even if you have accumulated the savings to cover it responsibly, control the desire to spend. “A large purchase, a car or otherwise, can affect your mortgage terms when the time comes to seek financing,” says Matthew Rand, Managing Partner of Better Homes and Gardens Rand Realty. After applications are submitted and the numbers are crunched, your extra loan payment will affect the terms you wind up receiving when all is said and done. “The less complicated your finances appear to the loan officer, the better off you will be.”

Avoid any unnecessary moving around of money as well. When a lender reviews your finances for approval, one of the major concerns will be the source of your down payment, closing costs, etc. You’ll also need to provide statements for the last two or three months on any assets. “If you have moved money around recently, there may be large deposits and withdrawals on your accounts, which will make it difficult for the lender to properly document,” says Rand. “Try to leave your money where it is until after you speak with a loan officer; this includes not changing banks either.”

If you can prevent it, don’t voluntarily change jobs while trying to purchase or close on a house. Again, the source of your income is extremely important to a lender. If there is any question about where your money will be coming from, it could put your deal in jeopardy and increase your level of risk to the lender. Although sometimes a change in jobs is unforeseen and unpreventable, try to close your deal before making a professional move. “You need the lender to be confident in your ability to pay back the loan. Showing a long history of steady income is crucial to your success as a buyer,” says Rand.

By appropriately planning and making smart financial decisions throughout the buying process, you will experience less hurdles and a much more efficient transaction.

Reposted from The Rand Blog

Given the current state of mortgage lending, knowing where you stand credit wise is even more important now than ever.

A pre-qualification is normally issued by a loan officer, who, after interviewing you, determines the dollar value of a loan you can be approved for. No credit checks are done, no employment history taken, nothing is submitted to an underwriter. However, loan officers do not make the final approval, so a pre-qualification is not a commitment to lend. After the loan officer determines that you pre-qualify, he/she then issues you a pre-qualification letter. In times past, before houses were selling very quickly (between 1997-2005) we used pre-qualification letters. However during the peak seller’s market pre-approvals (explained in the next paragraph) became the standard in the Greater Hudson Valley Region.

It is important to note that in truth anyone can be “pre-qualified”. Your realtor can do it for you, they simply have to know the lending guidelines.

The better course of action if you are a serious buyer is to utilize the Pre-Approval Letter. This can only be secured through a lender. Given the buyers market we have now, the pre-approval letter is still all-important. Everyone has heard of the high foreclosure rates, short sales and, frankly, all of us are suffering at the gas pump. This makes a pre-approval letter an absolute must in these times.

No self respecting (and sane) agent should put any prospective buyer in their car unless they are fairly certain they are ready, willing and ABLE to purchase. And no self-respecting prospective buyer should expect any realtor to act as a taxi driver.  It is also important to use a LOCAL LENDER, preferably a senior officer and one with whom the agency has had successful past dealings.  All these preparations are very key to a successful transaction.

Pre-approval is a step above pre-qualification. Pre-approval involves verifying your credit, down payment, employment history, etc. Your loan application is submitted to an underwriter and a decision is made regarding your loan application. If your loan is pre-approved, you are then issued a pre-approval certificate. Getting your loan pre-approved allows you to close very quickly when you do find a house. A pre-approval may help you negotiate a better price and/or terms with the seller, because they know that the buyer is serious enough to have answered the hard questions with a lender. Often having a pre-approval at the ready can give you a leg-up if you are up against another buyer who did not come to the table so well prepared.