DO's & DON'Ts WHILE YOUR LOAN IS IN PROCESS
| With the thrill that comes with an accepted offer and a "yes" from the lender, many home buyers make the error of taking their enthusiasm straight to the mall |
or appliance store. Until your loan closes, there are still many things with which you don't want to "surprise" your lender. With the latest credit underwriting processes, everything comes into view.
Here are some things to stay clear of during the home buying process to be sure the transaction goes smoothly.
DO keep originals of all pay stubs, bank statements, and other important financial documents which may be required to update any documents that are over 30 days old prior to the closing of your mortgage loan (a requirement EVEN IF your loan has been fully approved).
DO provide all documentation for the sale of your current home (i.e., sales contract, closing statement, employer relocation/buyout program, etc.).
DO notify us if you plan to receive gift funds or other monies for your down payment, for which you may have not given previous documentation. Your down payment funds are expected to come from assets which are disclosed to the lender. The lender will ask for, prior to closing, proof that the earnest money check came from a disclosed account.
DO notify us IMMEDIATELY of any anticipated (or unanticipated) employment or income changes (i.e., change of employer; recent raise/promotion, change of pay status, such as salary to commission, change in the number of hours being worked, etc); or change of receipt of rental income, child support/alimony -- any changes of income stream whatsoever.
DO notify us IMMEDIATELY if there is a change of marital status or financial status, including any increase in debt.
DO disclose any debt, regardless of whether or not it appears on your credit report.
DO start shopping for homeowners' insurance, as homeowners' insurance is required by the lender, and is predicated not only upon your credit score, but the claim experience of the property being purchased.
DO keep current on ALL of your payments, including rent, mortgages, auto, credit cards, private notes, etc.
DON'T go on a job search. Stability in your work history is a good thing to lenders. Finding a new job (especially one with a bump in salary) may not affect your ability to qualify for a mortgage. But for some, changing jobs during the mortgage loan approval process might bring concern and affect your approval. Keep in mind that prior to the lender FUNDING your mortgage loan -- after closing -- that the lender will do a last-minute VERIFICATION OF INCOME. If your employment status has changed, your mortgage will not complete.
DON'T open or close or transfer money around in your asset accounts without first conferring with us. Transferring funds after asset statements have been submitted to the lender may require proof of withdrawal of the funds from the one account, and proof that the funds have been received in the other account. Also, please discuss with us ANY funds deposited in your assets accounts in excess of $250 that are not normal transactions (i.e., payroll, social security, direct deposits, etc.), as the lender will require documentation on abnormal deposits.
DON'T make major purchases during your loan approval stage or prior to closing. Although you will be dreaming of ways to turn your new house into a castle, avoid big ticket purchases like appliances, electronics, or expensive furnishings. You will also want to avoid vacations and vehicle purchases until your loan closes. Lenders, many times, will pull new credit reports just prior to closing. If credit balances, and minimum monthly payments have increased from the time of your original approval, your loan approval could be jeopardized.
DON'T make large cash purchases or enter into other contracts prior to closing (without first consulting with us) because if your reserve accounts aren't similar to what was initially accepted and approved by the lender, your loan approval may be withdrawn.
DON'T give your FSBO ("For Sale by Owner") seller earnest money, delivered to his door. Your good faith deposit does not belong to the seller: it remains yours until the sale closes, unless otherwise specified in your purchase agreement. Your earnest money is normally used as an offset for your down payment and closing expenses. The title company, an attorney or other neutral person should place your funds in a trust account until you close. Your purchase agreement should indicate who keeps the deposit if the transaction does not complete.
DON'T amend your tax returns once your tax returns have been submitted to the lender. One of the last verifications the lender does, prior to closing, is to contact the IRS to verify that the tax returns and W-2 information provided to the lender are the SAME numbers as were provided to the IRS. Also, please note that the lender will require that you sign another 4506-T (request for tax transcripts) at closing, and that the lender will retain the right to re-access your transcripts for 120 days after closing.
REMEMBER, just prior to closing, the lender will verify:
1) Available funds for closing, which will need to come from a previously-disclosed asset account. As well, closing funds will need to be WIRED to the title company at least 24 hours prior to closing;
2) Current employment status, to make sure you are still employed, and expected to be employed in the future, and that you have not had a pay or hours cut;
3) That you have made timely payments on your credit obligations, not opened new credit, nor run up large new balances on your current credit cards, or lines of credit.
Still more questions? Call Ginger Sullivan at 505-995-8888 now. She is HERE to help the process easier for you.