When obtaining a home loan, you’ll receive two important documents from your lender: a loan estimate and a closing disclosure. On the surface, these documents are very similar, but they both serve different purposes. Here’s what you need to know about the differences between these two forms and what each means for you:
What NOT to Do When Applying for a Kansas City Home Loan
Applying for a Kansas City home loan can be intimidating whether you are first time homebuyer or a seasoned homeowner. At the moment, mortgage bankers are being very cautious about who they choose to lend to. Some people mistakenly believe that once they are approved for a home loan, nothing will alter their approval. Unfortunately, this is not the case. To prevent problems post-approval, remember your status may change by:
- Making big purchases
- Making a career change
- Harming your credit
- Forgetting to provide important paperwork
Don’t Make Big Purchases
Big purchases can change your financial situation quickly. Lenders can pull financing from borrowers if they make hefty purchases such as a car or new appliances before their deal is final. Refrain from purchasing big ticket items before signing your closing papers.
Don’t Make a Career Change
You will need to prove you have a stable income before lenders will approve you for a Kansas City home loan. Your lender will look at your salary and job stability before deciding to give you a Kansas City home loan. While a job change can mean a raise or promotion, it could delay the loan process. If you must change jobs, make sure to stay in the same industry or a similar profession.
Don’t Harm Your Credit
When it comes to your credit, you should not make any drastic changes. It’s important to maintain the same credit profile throughout the entire loan process until your mortgage paperwork is signed and you have closed on your new home.
Although it may seem appropriate to apply for a credit card at a furniture or hardware store when buying a home, steer clear of this at all costs. Applying for new credit can lower your score. In addition, your lender may worry that you will spend too much and default on your loan.
Also, do not close any current lines of credit. Instead, just pay them off like you would every month. Closing credit cards can be hazardous if you have debt because the debt takes up a higher percentage of your available credit. This will alter your debt-to-income ratio.
Don’t Forget to Provide Important Paperwork
Once you are ready to apply for a Kansas City home loan, you will need certain documentation to secure your financing. Some of the items you need to gather include:
- Most recent W-2s and federal tax returns
- Residence history for the past 2 years
- Original paystubs for the last 30 days
- Banking statements for the last 2 months for all of your accounts
- Letter for gift funds or grants
Remember you will be required to show the source of funds for your down payment and closings costs, if applicable. Do not move any money around without a paper trail. If you have any unusual deposits, you will need to provide complete documentation of where the money came from.
The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.