When we come to the end of any calendar year, isn’t it amazing to look back over the last 12 months and realize just how much has transpired? And, of course, the resolution season is upon us. A blank page opens before us each January 1, presenting an opportunity to make changes and write a new chapter. Before we tear that last sheet from our calendars, let’s take a closer look at how the actions we take now – at the start of 2015 – can make the home loan process easier in the year ahead.
Know your credit profile. If you have always maintained excellent payment history and have recently obtained new credit without difficulty, it is unlikely there’s anything about which to be concerned. But if you’re unsure, legal provisions allow you to request a free credit report by going to www.annualcreditreport.com. You will not get your FICO scores here, but you will be able to determine if any erroneous credit tradelines report in your name. While on the topic of tradelines, if you plan to get a jumbo loan in 2015, you would be wise to establish the necessary credit depth. Remember, when it comes to shaping your credit profile, you may need time. Why not start now?
The tax man cometh. “Death and taxes” – everybody knows the mantra. This year by April 15 (or October, if on extension), everyone must document 2014 earnings with the IRS. If you are self-employed and also looking to finance real estate, you will again confront the dilemma faced since the extinction of stated income loans: Do you minimize taxable income, pay less taxes and qualify for less on the home loan side? Or do you bite the tax bullet now and show the lender a higher gross income figure? This is worth a frank discussion with your own tax professional to determine the best strategy for you. Even if you are not self-employed, save your year-end stub and keep it somewhere accessible. Paystubs often show the breakdown of base earnings, bonuses, commissions, etc., that a W-2 will not show. This knowledge may help us avoid delays and pre-approve you more accurately when you need it.
Checking your savings. One of the more exasperating elements of a present-day mortgage approval can be the documentation of assets used for down payment, closing costs and asset reserves. Mortgage lenders need to track down the origin of non-payroll deposits. To avoid time spent on this, take your down payment funds and “quiet them down.” That is, put them in an account, preferably interest-bearing and one from which you can originate a wire to escrow. It should be an account that doesn’t have a lot of “coming and going” activity. By doing this, when the time comes to document your funds to close, you can produce the required months’ statements from a single account. No need for a lengthy paper trail of how money got from Point A to Point B. Finally, take a look at your 401K contributions for 2015. Are they in line with your real estate financing goals?
Resolving to organize your finances can be as simple as simple as reaching out to the right professionals for guidance as early as possible. The start of a New Year is a great time to do this, and when it comes to a home loan, we are happy to be of service.
One final reminder. If you already closed a loan in 2014, do yourself a favor and locate your settlement statement from that transaction. You’ll want to have that handy when you go to file your tax return in a few months. If you closed a loan with us, just call or e-mail and we’ll send you a copy.
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