10 Don’ts To Sail Through the Loan Process

Once a loan is preapproved, many homebuyers mistakenly believe their loan is a guarantee.  Little do they know, mortgage lenders are still working to fully approve and push their loan through up until closing day.  With these tips, a new homebuyer can help to avoid some common mistakes and sail through the loan process when buying a new home:

1.  Don’t pack papers too early

Underwriters may ask for extra documents so until the loan actually closes, the safest approach is to keep personal financial documents readily available.

2.  Don’t use a 10% appliance discount

Some stores offer an extra 10% off when clients open a new credit card.  Applying for that card could cause your credit to be pulled again just before closing, causing your score to drop and possibly delaying the close.

3.  Don’t make large cash deposits

Defer that $1,000 cash birthday gift until after closing.  All “gifts” have to be verified with a detailed paper trail, so you should avoid making large deposits by cash or check during a home purchase.

4.  Don’t start a new job

A job change could mean a change in income or a break in your compensation history, which could stall the loan process.  Consult with your mortgage advisor first to navigate any major decisions that could affect your home financing.

5.  Don’t wait to sell stock if using it for a down payment

Homebuyers who are planning to sell stock to use as a down payment sometimes wait, hoping the value will rise.  Not only could the value drop, but to ensure the loan is approved, you need to provide documentation that shows you have sufficient funds for closing.

6.  Don’t be careless with rental security deposits

Don’t plan on using your security deposit toward the last month’s rent.  Because your rental history must be verified, skipping a payment or registering a “late” payment could negatively impact your loan approval.

7.  Don’t ignore a duplicate request for documentation

Homebuyers are sometimes asked for a document they already provided because of a missing page or corrupted file.  Call your mortgage advisor to learn the reasoning behind the request, then send in the requested information as quickly as possible.

8.  Don’t forget to pay bills

Buying a home can be a hectic time in your life.  But even if a credit report has been run once, it can be run again before closing, so it’s important to stay on top of payments.

9.  Don’t toss blank pages

Homebuyers often toss the last page of a bank statement because it’s blank or has an ad on it.  If there is a page number on the blank page, it still must be included.

10.  Don’t discard paystubs

Save your most current copies of paystubs, bank statements and other key financial documents until your loan closes.

 

Courtesy of Karen Burrous, Opes Advisors

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