Whether you are buying a home or refinancing the one you already own, there are steps you can take to avoid unnecessary problems as the transaction gets to closing. While it is important your chosen loan officer (read->Me;) helps to educate you on these, doing your due diligence before hand is rarely a bad idea. Here's some food for thought:
- If you are required to bring money to the table, make sure you have enough money in your account to do so. Also, lenders & banks often require that funds to close a loan are seasoned and sourced. This simply means that they want to know where it is coming from and how long it has been available. Generally speaking, they want to make sure that it has been available at least 60 days. As far as the source of the money, your bank account is acceptable. Your mattress is not.
- Don't be moving large amounts of money around. Any irregular deposits being made that don't jive with your regular banking habits may put up a red flag. That red flag would then have to be explained.
- While you may want to buy furniture, that gorgeous new car, or the newest vacuum cleaner from Dyson, avoid any large purchases prior to your loan being closed. If we have to re-verify your credit and another debt shows up that didn't at the time of the initial approval, it could kill the deal and your dream.
- If your loan approval requires you to pay off bills or back debt, DO NOT PAY THEM YOURSELF, CONTINUE TO MAKE ROUTINE PAYMENTS UNTIL YOUR LOAN CLOSES. Just gather the most current monthly statements or most recent statement on a bad debt and get them to your loan officer. That way the Title Company and Lender can make sure the debt is paid off in full.
- If there is any change in your employment, notify your lender immediately! While you may dislike your wise-ass boss or the people you work with, do not quit your job. You can quit after the loan closes. Then again, you'll need some source of income to pay your mortgage so don't quit your job (after the loan closes) until you have another lined up.
- Don't apply for any type of additional credit until your loan closes.
- Do not open or close any accounts you currently have on your credit. Of note, closing an account that you have paid on time is not generally regarded as being too healthy for your credit score.
- Continue to make ALL of your payments as agreed, especially your mortgage even when you are refinancing your loan. If your loan officer ever tells you not to make your mortgage payment, disobey that incompetent entity and find a new loan officer. The only exception to this is if your loan is clear to close and your signing the papers the next day. If you make any extra payments to your mortgage before closing, they will be applied to your pay-off or refunded to you from your former mortgage company.
- If your loan officer asks for documentation, they probably need it. While you can question why they need it all day long, it is counter-productive to the common goal... your loan closing.
- This last piece of advice is one for anybody wanting to get pre-approved to buy a home. Your loan officer will take a full application and run your credit and probably issue you a pre-approval for such and such amount of money to buy a home. Do everyone involved a favor, supply all supporting documentation (pay-stubs, W-2's, bank statements, etc) as soon as possible. That's a real pre-approval, my friends. Sorry, I just had a John McCain moment:) I see quite often that folks mistake what they actually make in income or have in the bank account. If you supply them with everything, the full story is there. When you supply the full story, it makes the lending decision easier to fund your book.
Make homeownership a wonderful dream, nightmares are better left to film and certain parts of the imagination.
Jason Sardi
Mortgage Consultant
Infinity Home Mortgage Company, Inc
Toll Free @ 1-866-262-8720 ext. 229
jsardi@ihmci.com (and think twice before you spam me, I can be deadly with words;)
Jason - If every borrower followed these steps it would sure help to avoid some of those nightmare scenarios we find out about at the last minute.
Donna - Very true. As a loan officer, I've sometimes in the past learned the hard way to make sure clients know this type of stuff going forward.
Jason,
Good to see you back to lending! o:)
Great post. Just two points. "If we have to re-verify your credit and another debt shows up that didn't at the time of the initial approval, it could kill the deal and your dream." Buyers should plan on one final check by the lender before funding the loan. Even a credit check by a potental lender can stop the funding! Don't let the car dealer, furniture store, ect. check your credit before the new mortgage is recorded.
"I just had a John McCain moment" That was an Obama moment, going bad after approval! It was a great analogy though! 90% of Underwriters decisions have been right! 50 % of primary voters have been wrong, 55% of the voters in the general election were wrong! Actually there was no right choice the only options being dementia and demented.
All our best to Jennifer,
Bill
Jason, kind of like you need to cruise into a closing with status quo and not adding any new debt or losing income. All changes have to be reflected in the end which could knock the deal off the table. I actually bought a house after losing a job once, so many things are still possible if you stay in touch with your lender.
Bill - You know me, I never left;) "Actually there was no right choice the only options being dementia and demented." I like that. At this point, I figure that from a political perspective it is my duty as a human to help other humans out the best I can. That, and throw verbal slurs with Ann Coulter:)
Gary - How many times can the "communication is key" cliche be thrown around before everyone gets it? Probably not enough. If folks aren't communicating, there's typically something hiding... which rarely makes for a good ending.
Jason - Very important information. I go over most of this items with my first time home buyers. One that I had never thought to include was "Don't be moving large amounts of money around" until I had a buyer in the loan process who decide to do this practically weekly, even after he was advised to please stop. He almost did not get the loan. This has now been added to my list.
Hi Jason, This should be a featured post and a handout to every buyer,seasoned or not. With your permission, would like to copy this and include in my Buyers Preparedness Package. For the buying end especially how the new person is counseled will have a lot to do with how easy or difficult the transaction will become. This is marvelous and just the right amount of advise for getting ready to buy from the financing side. I like this and I hope you will say it's oK, because I just copied it, giving full credit to you, the author, :-)
William - You never even need to ask, it's yours.
Sandra - And I hope it helps that list.
Jason,
Good checklist!!! Thanks, Fran
Jason- That is a good checklist. I will never forget the buyer who was called during a closing to have her loan pulled back because she went out and bought a new car the week before her closing!
Jason, there's nothing like being at the settlement table and having the buyer say, "Oh, I don't have that much!" Yikes.
Fran - Thanks, my man.
Katerina - Fourteen years removed from my High School Education (I won't even get into the College Stuff), I finally love knowledge. I prefer the "Real-World" kind.
Patricia - That sounds like a situation where our charming personalities must come into play. Some call it "Sales". Yikes, indeed.
J,
That's what I see...they want to know that the money has been there for a while so it doesn't look mysterious. Usually they like to see it there 30-90 days unless that's changed...I don't know.
Good advice there are so many that don't know the rules of the game. The one I see a lot is when a seller wants to sell their home and also refinance too.
Neal - 60 days is the target for most investors that I know.
Bill - Good point and not talked about enough. Once you put your house on the market, it disqualifies you in many, if not all, lender's eyes to be able to refinance for 12 months after your home was on the market.
Buyers don't do these things intentionally and would not do them if they knew it would mess up their loan. Most don't buy a house every day or even every year. Keeping people informed of the process our job as professionals. I like the way you put it here. Nice and straight forward.
Hand this information out to Realtor you are working with so that they can put it in a buyer's packet! It's sound advice.
I learned a thing or two from this. And you were surprised by that, so it just goes to show that repeating what we, in our industry consider common knowledge is often gold to the consumer.
This should be featured!
MWA!
Jennifer is right! This should be featured. There is some very good advise in your checklist.
If you are required to bring money to the table, make sure you have enough money in your account to do so
.... boy how many times has this become a last minute issue, and my buyers have been scrambling for the last few thousand bucks because they werent totally aware of their situation.
Terrific list mate !
... hope you are well ...
Sheldon
Jason, You touched on some really important points here. I think I have seen many of them play out recently in my own clients transactions. Great job!
Donna - True that. If they are educated from the get-go, they will be much less inclined to do anything to put their loan in jeopardy.
Linda - That's not a bad idea. I think I will do that:)
Jennifer - Yes, I was a tad bit surprised. Just goes to show....
MWA!
Sheldon - Thanks my friend. Hope things are well with you and your new addition:)
Diane - It's always nice to take preventive measures in education so these things don't play out. Thanks.
Dude, this is great! You should put it in a brief word document format..I wouldnt mind a copy!
Well done!
I often have thought about doing a checklist of, "WHAT NOT TO DO AFTER YOU APPLY FOR YOUR LOAN! ">..
Thanks again! D-Mo
Sardi - all great points, more lenders need to make sure their borrowers absolutely understand this.
Hi Jason-You young man are a wealth of knowledge. Yes, YOU are a young man like Luke Skywalker. But if you want to live to be as old as Yoda then you might want to use moisturizers and anti-aging cream and start now while you are young. LOL sorry I couldn't help myself.