Getting ready to buy a house, preparing for mortgage and little things (insurance, loan)

[NomadMia7]

Hi all, we are getting ready to buy our hopefully "long-term" house in NC. I have been getting the bank accounts in good order and wondering what else I should do, or who else to ask for advice in my area? We will be buying new construction house worth 600k or higher, with 20% down. Credit score is around 770, all credit cards paid monthly in full, no student loans, 1 car loan with balance at 19k (1 year and 2 months old), no other debt.

I have all of my down payment money in 1 account, as is other money that is slated to pay off this car loan (Toyota motor corp). I was able to pay off the car in full when I bought it, but took out a loan on it to "build up" my credit score. The loan is now 1 year old, should I bother with keeping it or just pay it off? Would it hurt or help with the mortgage and credit score process at this point in having another type of loan? And if I pay it off, is it okay to pay off the loan with money that is in my 1 savings account, where my down payment is also? Basically, does all this "little stuff" matter when getting a mortgage? I have carefully "set aside" enough money for a 20% down on the house and also money to pay off this car loan and 1 will not affect the other.

Also, I drive a 14 year old car that I'm trying to keep until it dies (a Honda!) But with a house purchase coming in the next year, this car may or may not make it. This will make us buy or lease another car before we close on the house or during the mortgage process. What is the best course of action here? I'm guessing buying or leasing will not make a difference in the mortgage process? I am guessing to definitely pay off the other car loan first before we go down the 2nd car route, correct?

[SmartMoney]

It depends on what your ratios are before anyone can advise you about the car that is about to go belly up. Personally, I would recommend paying cash, even on a decent used $10K car for commuting, something that will hold its value (Honda, Toyota, great cars), pay cash and then sell it when the house has closed. I am trying to keep as much cash in the bank for you.......but you could pay off the other and replace it with another car loan.

But to the other advice of what to do, here's some cut and paste excepts I send out to my buyers at first when we start the ball rolling:

Credit cards. Whileshopping for a home (or being under contract for a long time), it’s veryimportant to keep your credit cards paid on time and restrain from any largepurchases. Please avoid letting anyone runyour credit while you are shopping for a home and please do not close anyrevolving accounts. This can actuallylower your score, even as much as a late payment could. About 72 to 48 hours prior to closing, asoft-pull (meaning it won’t show or hurt your credit score) report isdone. This will tell us if there havebeen any new accounts opened, any inquiries for new credit, and any increasedbalances. Substantial increases mean another trip back into underwriting.
Nonpayroll deposits. Ifyour bank statements have “counter deposits” listed, we will be required toshow the source of those funds. In manycases, it could be a payroll check that doesn’t have automatic deposit. Or, it could be an insurance reimbursementcheck, bonus check or the sale of an item. We go back 2 months on the statements, in some cases further (we reallytry to avoid this), but every file is different. The best way to handle deposits that are notalready identified as payroll is to make sure you deposit the full check (sothe check stub matches the deposit). Ifthere is no check stub or tear off description, please make a copy of thedeposit before making the deposit. Please do not deposit any gift funds without specific documentation withme and call me should someone give you cash. Why all this bother? All loantypes require we verify the funds as rightfully belonging to you. (money laundering laws - think Breaking Bad, lol)
Unreimbursed employment expenses. Ifyou claim unreimbursed employment expenses on your tax returns (Schedule A,line 21 or Form 2106), it is imperative you share this information withme. Most loan programs require us topull IRS transcripts to check for these expenses, which lower your qualifyingincome.
Documentation. It is recommended you do not pack any original financial documentationthat cannot be duplicated online. Manytimes, one document will be a trigger for another document. An example would be transferring money fromand account not listed on the application. Remember, we will be asking about those deposits. So this means I now will need two months ofthe "unknown" statement.

It's hard to forewarn everyone of every possibility, because everyone's situation is truely unique, making our job so much harder. But these are the most common challenges we run across.

OH, BUT A NEW ONE I AM GOING TO ADD:
Be consistent with your name throughout your file. Do not have the agent put you name in the contract one way, make your loan application another, and file your taxes a third way. Because photo ID frequently adds a name never used in obtaining credit, I don't recommend everyone suddenly start adding their full middle names to everything........but be somewhat consistent, very important and it will save a lot of time and heartache.


Good luck!

[Jkgourmet]

I'll add some important, but slightly off topic advice.

Hire your own realtor, even with new construction. Do not rely on the builder's sales agent to protect your interests. And get anything that sales agent tells you IN WRITING. Follow up all verbal conversations with an email detailing what was said, and ask them to confirm this information by reply email.