A few ways to ensure the American Dream doesn't turn into a Nightmare.
This post is by a very close friend of mine and knowledgeable mortgage guy and provides valuable tips on how to make the mortgage process smoother.
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.
Infinity Home Mortgage Company, Inc
Toll Free @ 1-866-262-8720 ext. 229
firstname.lastname@example.org (and think twice before you spam me, I can be deadly with words;)
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