Loan Do’s and Don’ts before and during a mortgage application

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You are thinking that now is the time to jump into the market and purchase your first (or next) home? Ready to apply for a mortgage? What are the loan do’s and don’ts before and during the process is key to a smooth and successful home loan application.  Don’t make mistakes that could make it more difficult or maybe even derail you all together.

Don't do this

Don’t decide on your own what information or documentation you should be providing. You, and everyone involved, will only become frustrated when more documentation is requested as new items are uncovered. This can also open the door to unwelcomed last minute surprises.

Yes, do thisBe prepared and answer all questions truthfully and completely. The process will be quicker and smoother if you gather as much documentation upfront as possible.  Total cooperation on your part is important.

Don’t go on a shopping spree or shopping for a new car, or furniture or or start applying for credit cards because the store is offering a discount.  New debt will push up your debt to income ratios and new credit inquiries could lower your credit score potentially causing you to no longer qualify

Continue to keep up with all of your bill and pay everything on time. If a purchase is urgent, discuss it with your loan officer BEFORE you move forward with it.

Don’t make large deposits into your bank account that can not be property sourced and paper trailed, particularly cash deposits.

Talk to your loan officer about any funds that are coming your way which are not from payroll income. There are rules about what is an acceptable source of funds for down payment and closing costs. Properly documenting gifts or other sources are funds is important or you could risk having those funds excluded.

Don’t change jobs or give notice.  Your employment and income are a huge portion of your loan qualification. All lenders verify employment for underwriting approval but also 24-48 hours before the loan closes. If you no longer work at the same job or you have given notice, your loan will come to a complete halt.

        If you have a job offer that simply can not be passed up or postponed, speak to your loan officer immediately.  You will have to allow for a longer escrow as your new job will have to be verified and income documented.

Don’t go on vacation, drop off the face of the earth or decide that you are only available evenings and weekends during the process. This will cause delays in the processing and closing of your loan. If it takes you 3 days to read the email or listen to the message letting you know that a question or documentation is pending, don’t expect that your lender will make up for the time lost and keep your closing date on target

Returning calls and emails promptly is very important to keeping the time line of your escrow. There are certain things that can only be handled during regular business hours (rate locks, bank wires etc). You may need to give up a few minutes of your lunch hour to return phone calls  or emails. Work with your loan officer, she or he should be able to accommodate your shorter time frames of availability during the day

Don’t assume you know the answer to a question because you thought you heard it somewhere or read it on the internet. But, don’t ask for advise from your mechanic, the guy at the coffee shop or your hairdresser who was once a loan officer in the 70’s.  

Do ask your loan officer any and all questions you might have about all parts of the process from beginning to end. She or he is there to be your resource of information, not just to quote you an interest rate.  If the answer is not clear, ask again.  Better to ask 5 times than be frustrated about feeling in the dark

So be prepared, honest, cooperative, informed and available and you will be on your way to the best experience possible. 

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