Getting through the Mortgage Process....APPROVED!!
You've found the perfect home, you've made an offer, and you've completed your loan paperwork….you're almost there! Just don't drop the ball now – follow these rules to ensure a touchdown for your entire family!! You know your credit has been alright to this point, but now let's talk about keeping it that way throughout the mortgage process.
1. Don't apply for new credit of any form: And when I say any—I mean ANY!! Most, banks pull your credit just before closing and every credit inquiry pulls your credit score down or you could change your debt to income ratio.
· Don't continue mortgage shopping – in some cases people have looked so long for mortgages they disqualified themselves.
· Don't lease or buy a car
· Don't go furniture shopping and take advantage of those no payments for 12 month programs (Guess what, they'll pull your credit too)
· Don't get any new credit cards – even the ones that say "pre-approved" (they will pull your credit!!)
· Don't cosign for anyone else's lease
2. Don't change your financial practices: Unusual activity can raise red flags. So keep it normal and safe. Meaning:
Do keep all of your existing accounts current – including your mortgage or rent!!
Don't switch banks
Don't over-use your credit cards – keep 30% availability
Don't consolidate debt onto 1 or 2 cards – this could make it look like you have maxed out 1 or more cards.
Don't enter into credit counseling
Don't close existing credit cards – this could change your debt ratio
Don't pay off old collections accounts – this could lower your credit score.
3. Don't change employers– mortgage companies consider length of employment, so try to delay any career changes.
4. Don't move - mortgage companies consider the amount of time you have lived at a residence.
5. Don't pack important documents - the lender will need information from you such as bank statements and W-2, make sure they are accessible.
6. Don't spend all your money – many lenders require that you have a certain amount of money in the bank after closing costs and will verify this before closing. Check with your lender before you start spending.
7. Don't avoid your lender – this means providing them with requested information and any and all changes made to your contract throughout the mortgage process.
8. Do ask questions and stay informed- lenders and your real estate agents can answer many questions to help you understand the process. Suggested questions:
· Can I see my credit report?
· Can you help me understand the Good Faith Estimate?
· Has the property been appraised?
· Did the appraiser point out any problem areas?
· When will the underwriter have my paperwork?
· When will the closing agent/attorney have my file?
· Can you explain the closing statement?
To sum it all up, remember that they don't just pull your credit report and then you're free and clear. Keep your credit as normal and clean as possible throughout the process and stay informed. You're almost done, just a little more diligence and you'll have the home of your dreams!
Photo Attribution: Photo taken by Editor_Tupp.