applying for a loan Archives

There are many ways to prepare to buy a home, but a major one is to ensure your finances are completely sound. A lender is going to request many financial documents, one of which will be your bank statements. While it might seem like an insignificant request compared to your taxes or paystubs, your bank statements are vital to get your loan approved. So, what do mortgage lenders review on bank statements?

The simple explanation is that a mortgage lender needs to ensure you have sufficient funds to cover the down payment, closing costs, and some might even want to see if you have enough reserves to cover the first few mortgage payments. It is paramount these funds belong to you and they have been in your account for a while. Underwriters are thoroughly trained to pinpoint all unacceptable sources of funds, hidden debts and other red flags by analyzing your bank statements. Before you begin the homebuying process, it is best to ensure you don’t have anything questionable on your statements that will raise a red flag.

Applying for a loan is not something to take lightly. Your lender is going to inspect your finances to ensure you have the money you say you do, and that the money is really yours. It is best to analyze your finances from the perspective of a lender a few months before applying for a loan to ensure you reduce the risk of having any red flags. This will also give you time to gather the documentation or explanations you might need in case you think something will catch the lender’s eye. Keep it simple both before and during the application process by not adding or taking out any unnecessary funds, and to help ensure you have a smooth experience.

One of our previous blogs on credit scores, Understanding Your Credit Score, talked about the factors used to calculate FICO scores (the most widely used scoring system). However, the blog did not go into detail on what a credit score is or the difference between credit report and credit score. The two are not only different, but they are used for different purposes. Here are the main differences:

A credit report is a record of your credit history. The report may include loan amounts, current balances, credit companies used, dates accounts were opened, recently opened lines of credit, payment history, third-party collections, and even details of public record, such as bankruptcies. These detailed reports are created by the three National Credit Reporting Bureaus: Experian, Equifax, and TransUnion. Each one of the Bureaus maintains one credit report per person. However, these reports can vary, since creditors do not have to report information to all three Bureaus. Federal law requires that each of the three Bureaus give consumers a free copy of their credit report every 12 months. You can receive a free copy of your credit report by going to www.annualcreditreport.com.

A credit score is an algorithm used to measure your financial risk based on the information on your credit report. FICO scores are the most widely used, but VantageScore, and banks have their own. FICO scores have 5 factors used to calculate credit scores, and it weighs each factor differently. The other credit companies use similar information but may have different weights and/or include other data.

Here are two key differences between credit reports and credit scores to consider:

Lenders use credit reports and credit scores to see if you are responsible for your finances, and to make sure that you won’t be overwhelmed if you take on another loan. When taking out a mortgage loan, lenders look at both your credit report and credit scores, and are required to show you the three credit scores that were pulled from each of the three National Credit Reporting Bureaus for the application.

Interest rates, terms, and whether you can apply for certain loans are factors that are affected by your credit score. Contact one of licensed mortgage loan originators today if you have any questions or would like to see if you qualify for a mortgage loan.

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All FHA Case Transfer Requests must be sent in writing via email to: FHAINFO@nfmlending.com. The request must include the FHA Case number, the new lender’s Origination ID or Sponsor ID, the full subject property address, and a letter signed and dated by the borrower expressing desire for the transfer.
Request for payoff should be submitted to the current servicer of the loan:
If your loan is being serviced by the NFM Lake Zurich Servicing Center, please call 1-866-352-6802 to request a payoff. You can also request a payoff via the online borrower portal, if you are a registered user on the portal.
If your loan is being serviced by the NFM Lending Linthicum Maryland Office, you may submit the request to Servicing@nfmlending.com or call 1-866-765-1827.
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