While you are considering the purchase of a new home, or exploring new financing on your current home, you should not do anything that will have an adverse effect on you loan from this point through the rest of the process.
We know it is tempting to begin making your new house a home or to spend your savings on fixing your existing home, but this is the time to keep your financial picture frozen in a stable position until your loan closes. The key is to CALL your lender if you wish to make changes to your financial picture; even the seemingly most logically beneficial moves can backfire and cost you thousands of dollars, or even impact your ability to obtain financing at all.
1. Do stay current on existing accounts - Late payments on your existing mortgage, car payment, or anything else that can be reported to a credit reporting agency can cost you dearly. One 30-day late payment can lower your credit score by 30-75 points!
2. Do continue to use your credit as you normally would - Red Flags are easily raised within the scoring system. If it appears you are diverting from your normal spending patterns, it could cause your score to go down. Make your changes after the loan funds.
3. Do call your Loan Consultant - If you have questions during the loan process, they are there to help and are just a phone call away. It's always better to ask first if you're unsure about something!
4. Do verify Cash to Close - You must provide documentation showing evidence of your cash to close and where it came from. Loans cannot go into closing until cash to close is verified.
5. Do follow instructions - We know that some request may seem nonsensical, but they are necessary for a loan. There is a lot red tape and moving parts to getting a mortgage, and your buying team of REALTOR®, lender, and closing company will guide you to the finish line with ease.
6. Do set up Home Owners Insurance - It is important to set up your home owner's insurance policy on your subject property as soon as possible. Your lender or REALTOR® can provide more information on insurance companies.
7. Do set up a closing date with your closing attorney/title company - This is when you will sign all final documents, so be sure this is a time and date that will work for you and any other purchasers.
8. Do communicate with your employer/HR department - Please let them know that a VOE, or verification of employment, will be sent to them for your loan and will need to be completed in a timely manner.
9. Do get addendums to your Loan Officer (LO) or Loan Officer's Assistant (LOA) ASAP - All things needed to be timely, or else this can hold up your closing.
10. Do be ready to order your appraisal right away - This is one of the third party items that can be time consuming. Delaying the order of an appraisal can cause you to not close on time.
11. Do sign any Good Faith Estimate (GFE) that is sent to your email and return to your LOA - GFE sends the borrower disclosures directly and periodically. ALL need to be signed and returned.
12. Do check your email regularly - This is their number one method of communication, and items will be mailed to you periodically throughout the day while going through the loan process.
13. Do date everything, and send every page of all documents, even if blank - If your statements say page 1 of 4, all 4 pages are required for the item to be accepted.
14. Do verify and source all deposits of $1000 or over - Especially if these are not directly deposited into your account. Other deposits may need to be sourced, however this is good to use as a rule of thumb.
15. Do verify all items Paid Outside of Closing (POC) - Any item such as an Earnest Money Deposit or Appraisal Fee will need to be shown on a bank statement transaction summary in order to have it credited to you towards your closing costs.
1. Don't apply for new credit of any kind - if you do, that company will pull your credit report and this will have an adverse effect on your credit score. Likewise, don't establish new lines of credit for furniture, appliances, etc.
2. Don't pay off collections or charge-offs - Unless advised by your Loan Officer, wait until your loan funds. This can also cause a shift in your credit score and/or savings balances. Keeping a stable financial environment is the best way to get your loan into closing without any hang-ups.
3. Don't Max out or overcharge existing credit cards
4. Don't consolidate debt to one or two cards
5. Don't close credit card accounts
6. Don't raise red flags to the Underwriter - Be sure not to co-sign on someone else's loan, or change your name or address. The less activity that occurs while your loan is in process, the better it is for you.
7. Don't make any adjustments or transfers on your asset picture - Such as moving investments, changing positions, closing accounts, opening new accounts, or substantially changing your asset picture without contacting your lender first.
8. Don't make any large unexplainable deposits into bank accounts - Account deposits exceeding past history will be questioned by an underwriter unless the deposit is documented as a gift.
9. Don't make changes to your Employment or Income Status
10. Don't deposit cash - All large deposits have to be sourced and cash cannot be sourced. This will be "backed out" of your account balance and not count as money available to you.
11. Don't overdraft your bank account - Any overdrafts will require addition documentation and/or can impact your ability to qualify for your loan.
12. Don't use electronic signatures or send any items that can be editable - Always ask your lender if you have questions about initials or signatures.