Mortgage Do's & Dont's
DO Get Pre-Approved
Not only does a pre-approval ensure that you are shopping for homes in price ranges you can afford, but it also can speed up the processonce you find the right home. Federal regulations restrict what a lender can send to a non-qualified applicant.
DO Check Your Credit Report
Visit annualcreditreport.com for a free copy of your report. You might be surprised to find numerous unsolicited credit inquiries from various vendors wanting to make you offers of credit cards or loans. Excessive credit inquiries can negatively impact your credit score — but you can put a stop to them by opting out via an 800-number provided in your credit reports.
DO Continue Paying Creditcard's and Other Debts
​There perhaps is nothing more critical to your loan than your FICO score. It affects your rate, the program, the cost of any mortgage insurance and your hazard insurance. Make sure you continue paying any credit card bills regularly and stay current on car or other loans. Do not open or close credit cards or get cash advances on a card or line of credit.
DO Let Your Loan Officer Know If Any of The Funds Will Be Gifted
Getting a gift is not an issue on the file as long as the proper steps are followed from the beginning. When receiving a gift, let you loan officer know before any funds change hands. We will guide you through the proper way of handling the gift and all the documents that will be required.
DO Expect a Final Credit Check Before Loan Closing
Even though you’ve been pre-approved for your new home loan, your lender will do a final soft credit check before issuing your all-clear to close on the home purchase.
“We are required to monitor the credit report and add any new debts and request information from the borrower on any new credit pulls,” says Roy. “Even if a borrower is well-qualified, it takes a few days to get the new debt added to the credit report and the loan back through underwriting, so closing is almost always delayed if new credit is obtained near the closing date.”
Even the smallest thing can affect a borrower’s debt-to-income ratios and their ability to purchase a home. “Underwriters will often ask for explanations on items that many people would consider insignificant,” notes Roy. “For example, one buyer had a small college loan reset just before closing that affected his ratios, causing the loan not to be approved. Unfortunately, this caused a domino effect for the three other homes, buyers and sellers involved in the contingent offers.
Bottom line, the time between loan pre-approval and loan closing should be considered a “quiet period” during which you should make no major changes in employment, residence, debt or anything that could affect your credit
DON'T Change Jobs
Some buyers will change jobs without letting their lender know because they think that if it’s a better salary, it won’t matter. Wrong. Most investors require 30 full days of paystubs, so changing jobs could delay closing until the 30-day paperwork is obtained.
DON'T Make Major New Purchases on Credit
“You absolutely do not want to make any major purchases until after you have closed on the home purchase,” advise The VanArtsdalen Group Manager Roy VanArtsdalen
For most borrowers, using their existing credit card for minor expenses will not affect them, but opening a new loan could absolutely delay closing. Consult with your lender before making any larger-than-usual purchases prior to closing.
DON'T Make Any Large Cash Deposits
Usually when a sizable amount of money is deposited into one of your accounts, it's time to celebrate — except while you're waiting for a mortgage loan approval. Under this circumstance, those additional funds can lead the loan underwriter to deny your mortgage loan unless you prove the deposit is legitimate.