When buying a home or refinancing your current home loan, there are some seemingly harmless, normal activities that can derail the process. Here is a list of things you should not do without first consulting your loan officer:
Don’t take on new debts
That means no new loans, consolidating, co-signing, getting a car lease or applying for new credit cards. Before your final loan documents are prepared, an updated credit report is pulled. This report does not have credit scores, but it will allow the lender to see all new credit inquiries, any new credit lines and most recent balances and payments on all accounts. If anything changes, your loan may have to go back to the underwriter for an updated approval. This may cause delays or worse; the status of your loan could change from approved to declined.
Don’t quit your job
If you want to quit your job and start your own business, don’t do it in the middle of the loan process. Wait until the loan process is complete.
Don’t withhold information
With today’s access to information and technology, mortgage companies do comprehensive reviews of all of your personal identification information and all of your financial history. A comprehensive search of property records to verify ownership interest in real property is also done. Withholding material information will only hinder a true assessment of your qualifications and can often pop up at the last minute.
Don’t make large deposits of cash
Don’t deposit a bunch of cash into your bank account that cannot be sourced. Please consult with your mortgage professional before depositing money into the bank other than your normal payroll check.
Don’t change jobs
This includes changing positions that impact the way you are paid. For instance, a simple switch from an hourly wage earner to full commission completely changes the way an underwriter looks at your income. Please inform your mortgage consultant with any changes to your current position.
Don’t do anything that could lower your credit score
Making late payments, increasing your credit card balances or simply applying for new credit can lower your scores and adversely affect your ability to get your loan approved.
Most people don’t like to be told what not to do, but these tips are terribly important to avoid disastrous pitfalls. To help make for a smoother loan process, here is a list of things that you should do:
Do keep original copies of documents or be able to access your original documents easily
Items like paycheck stubs, bank statements and other important financial documents may need to be updated throughout the loan process. It is not uncommon for people to pack away important documents while preparing to move. If not stored electronically, it is very important to keep financial records handy.
Do provide all financial information
This includes ownership information in real property and any other material information. A complete financial picture is required for a mortgage application. Any ownership interest in real property must also be disclosed, along with any material information. Examples of material information would be a recent divorce, spousal support agreement, child support agreement, or any private financial agreement or payment arrangement.
Do provide your earnest money deposit
This can be obtained from your own personal bank account or acceptable gift funds. Please talk to your loan officer or loan coordinator for additional clarification. This will present a very difficult problem if not managed properly at the time you write a contract on a home.
Do provide all documentation for the sale of your current home
If you are selling a home and then buying another home, the underwriter will want to review the sales contract, closing statement and any possible employer relocation or buy-out program for the home you are selling.
Do notify your loan officer or loan coordinator if you plan to receive gift funds
Gift funds may be used toward your down payment and closing costs, but only if certain criteria are met. Advances from credit cards for your down payment and closing costs are never acceptable.
Do notify your loan officer or loan coordinator of any employment changes
Employment changes could include a recent raise, promotion, transfer or change of pay status.
Do be aware that a new credit report could be pulled just prior to closing
So be careful!
Following these do’s and don’ts will smooth the process from the time you get prequalified to the time you close. For further explanation, contact your loan officer. JN
R.C. ‘Romey’ Romero is co-owner of Arizona’s home improvement radio program ‘Rosie on the House.’