Tips On Things To Avoid During Home Loan Process

This BLOG On Tips On Things To Avoid During Home Loan Process Was UPDATED On June 22, 2017

We have covered many blogs on what to do to get a mortgage loan approval. Mortgage borrowers need to be on pins and needles with their credit and finances during the home loan approval process. There are several Things To Avoid During Home Loan Process.

  • After a borrowers gets a conditional mortgage approval, there are Things To Avoid During Home Loan Process . 
  • Remember that a mortgage lender can disqualify borrowers at any time even if after a written mortgage loan approval. 
  • Borrowers need to be super careful from the time a mortgage loan approval has been issued to the time the loan has closed.

Do Not Open Bank Accounts

  • One of the things mortgage borrowers should not do is to open new bank accounts or close existing bank accounts. 
  • Mortgage lenders will ask for updated bank statements and want to see a history of bank deposits and withdrawals. 
  • Changing bank account will often lead to confusion and can cause possible delay on a clear to close
  • All funds that will be used for the down payment needs to be seasoned and bank statements will be scrutinized until the date of the closing.

Monitor Bank Accounts

Always cooperate with your mortgage lender’s requests for documentation, even though it might seem petty.

  • Mortgage Underwriters might want to know an explanation why there was a $100 deposit or a $300 withdrawal from bank accounts. 
  • Many folks might feel like telling the mortgage lender to mind their own business and what does such little trivial things have anything to do with getting a mortgage loan when they have plenty of documented cash in bank account for a down payment. 
  • However, borrowers need to realize that that underwriters may ask for things that may be petty and if borrowers do not cooperate, they will not approve the loan.

Do Not Quit Job During Mortgage Process

Borrowers should not change jobs and give notice of terminating employment until after they closed on their home loan.

  • Mortgage lenders require a two year history of employment. 
  • Changing jobs with the same salary will not disqualify borrowers in getting a mortgage loan closed but it can cause a delays. 
  • Borrowers who really need to change jobs during mortgage loan process, a new verification of employment will be required as well as 30 days of paycheck stubs prior to the issuance of a clear to close.

Do Not Co-Sign

Under no circumstances co-sign for anyone.

  • Cosigning for a child or relative for a car loan or some other loan might disqualify borrowers from mortgage loan on going further because lender will consider the new debt against debt to income ratio. 
  • Hard Inquiries has a negative impact on credit scores.

Do Not Apply For Credit

Do not shop for any mortgages or any other credit.  When consumers applies for new credit, creditors will do a hard credit inquiry. A hard credit inquiry will drop credit scores.

  • Do not apply for any credit cards or any other credit. 
  • Each credit check will cause a drop credit scores. 
  • Plus, the mortgage lender will be checking credit scores again prior to final closing
  • Lenders will need written letter of explanations on each credit inquiries. 
  • Many mortgage loan borrowers have a tendency to apply for credit cards from furniture stores where they off 0% financing and no payments until a future date. 
  • By applying for credit from a furniture store and purchasing the furniture now will cause debt ratios to go up, credit scores to go down, and cause mortgage loan to possibly get denied.

Do Not Make Large Purchases

If there are changes of circumstances or will have changes of circumstances during mortgage process, always let the loan officer know mortgage.

  • The loan officer will be the borrower’s best ally while the mortgage loan is in underwriting. 
  • For example, borrowers who need to buy a new car because old car is not repairable, they MUST talk to loan officer prior to incurring new debt.
  • Borrowers who have a change of marital status or anything that is dramatic, they need to let the loan officer know.

Do Not Pay Collections And Charged Off Accounts

Do not, under any circumstances, pay off any old collection accounts unless instructed by the mortgage loan originator.

  • Paying an old collection account or making a partial payment, that new activity will trigger the last of last activity date of the derogatory credit line item and will drop credit score.
  • Do not be late with any payments from the time of pre-approval to the closing. 
  • Mortgage loan closing can get delayed or denied because a borrower has innocently missed to make a credit card payment or auto loan payment. 
  • It is easy to overlook a monthly payment during a time of packing and preparing for the big move to new home but unfortunately, a late payment can cause a mortgage loan denial.  

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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