You should always make sure your income was reviewed accurately. This is extremely important! Make sure that your loan officer has reviewed your tax returns and pay stubs before he or she prequalifies you-not just your W-2s but also your actual returns. Even if you are 100 percent sure your income is simple to figure out, you must be sure this is done.
Many loan officers do not do a thorough job in the beginning, and it can lead to heartache and money loss for you later.
Specifically, ask your loan officer the following questions:
1) Do I have any unreimbursed employee expenses that lower the income that I can use for my loan application?
2) Do I have any Schedule C losses that lower the income I can use for my prequalification?
3) Did I average out my overtime, commissions, or bonuses over a two-year period in order to determine what I qualify for?
We find that this is the biggest area where most loan officers make mistakes.
They do not check everything up front.
Afterwards, ask about rate lock-in policies and procedures. Understand the lender’s interest rate lock-in policy! When does the loan officer anticipate locking your interest rate in? Will he or she lock your interest rate in right away? How long will it be locked in for? Do they offer a “float down” option if the interest rates improve? If so, is there a cost? What if you don’t close on time to make the lock? What will happen to the locked interest rate? What will be the cost to extend the interest rate?
These are all essential questions that need to be asked and are important to know the answers to. Know your rights and your options! Remember this: know before you owe!
