The process of applying, getting approved and closing on a home loan can be a difficult process that can cause tons of questions. In this article, I’m providing the answer to some frequently asked questions and some not so frequently asked but still worth knowing.
- Question: I changed my name, will that cause an issue?
Answer: If you change your name after your credit report is ran, then a new hard pull credit report most be obtained. A copy of your social security card proving your name change and you’d have to provide a letter explaining why your name changed. If your name changed due to a divorce, then your full divorce decree and proof of any child support or alimony orders must also be presented to the lender. If you changed your name due to your marriage, then a copy of your marriage certificate is required. My best advice is to leave your name as is until you close on your loan so that name change doesn’t create additional items needed prior to closing your loan.
- Question: I purchased a new car, do I still qualify?
Answer: Once you apply for a loan it’s important to leave your finances as is. Don’t make any large purchases on credit and don’t take large sums of money out of your bank account. If you have no choice and you must purchase another vehicle after applying for a loan, you would need to provide a copy of the new car loan statement that includes the bank name and contact information, the account holder name, the account number, the outstanding balance and the monthly payment. The credit vendor being used will verify the loan and payment history then provide a Credit Supplement. A supplement from the credit vendor is acceptable proof of a credit line to the lender. Next I must determine if the new car payment added to your debt to income ratio will allow you to remain at the same loan amount or does the loan amount need to be reduced. Either way, this is a situation to stay away from if you can help it.
- Question: I’m self-employed how do I prove my income?
Answer: The standard verification for self-employed borrowers are your last two years’ Federal tax returns to include all schedules. To simplify this explanation essentially, your adjusted income after most of your deductions are added together for the last two years then divided by 24 months to come up with a qualifying monthly income. If your qualifying monthly income is too low to qualify for the loan amount you want, then if you have at least 15% down payment and about a 650-middle credit score, then you could qualify for more loan amount using your last 24 months of bank statements in lieu of two years’ tax returns.
- Question: Can I use my child support and or alimony as income?
Answer: Yes, a lender will allow the use of child support and or alimony with proper documentation. That documentation normally includes a copy of the child support or alimony order to include proof you will receive the support for at least the next three years after and your last three months’ bank statements to prove you’ve been receiving the support payments.
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