During the mortgage process, there are many actions the mortgage lender will ask of you.
Among them, you will need to provide recent paystubs, W-2s and asset information.
At the same time, there are several key actions you should avoid throughout the mortgage process.
Why? Each item listed below could impede or even halt your chances at securing the home loan. The lender needs you to show financial stability in the months and weeks leading up to the closing table and the home purchase.
Here’s the list:
1. Do not change jobs, become self-employed or quit your job (without talking to your lender first)
A change in employment, even if the pay is better, may not translate well when qualifying to buy a home. Income calculation at the new job may differ based on how you get paid (overtime, commission, etc.). A consistent pay schedule is critical to show the ability to repay the loan.
2. Do not open any new debt
During the purchase process, be fiscally conservative. That means save rather than spend or take on more debt. Do not open new credit accounts including auto loans, student loans and credit cards. Those types of debt can jeopardize your qualification for a home loan.
3. Do not spend your money
Again, it’s important to save in these pre-purchase months. Do not use credit cards excessively or let current accounts fall behind. Lenders may need to re-run credit throughout the mortgage process including a soft credit check before closing, negative changes could affect your loan approval.
4. Do not make large bank deposits
Lenders always require large deposits to be sourced (track where the money came from). If a lender can’t source the funds, it may cause a problem with respect to your assets needed, such as down-payment and closing costs.
Here’s a real-life example from a past client where financial activity prior to the purchase delayed the closing date.
We ordered a soft credit pull on the client, who wanted to buy a home in Hampton Roads. We found the client had a new collection on the report related to an outstanding bill. The collection caused a delay of several days and the client had to find the money right away to pay the bill.
Otherwise, we could not have proceeded with the loan.
When we are in crunch time and preparing to help you buy a home, you can see how the slightest issue in your financial profile can hold up the purchase.
The less you do, the easier everything will go.
Shikma Rubin is a loan officer at Tidewater Home Funding in Chesapeake (NMLS #1114873). She enjoys the chance to lead workshops and webinars on how to buy a home in 2019. Have mortgage questions? You can reach her at srubin@tidewaterhomefunding.com or 757-490-4726.