No - No's during the Mortgage loan process

By
Mortgage and Lending with Ruoff Home Mortgage 234777

So you just met with your Mortgage Loan Officer and they indicated that your credit looks good,your debt to income ratios are okay and your asset statements validate that you have the necessary funds to bring to closing. All that is needed now is the appraisal to come back with a certain minimum number and we can submit to Underwriting for approval.

Most people feel like their work is done and all they have to do is prepare to move. Don't let your guard down. You are still under the credit microscope until the time you sign your closing documents.

 Here are 4 potential pitfalls that borrowers don't consider as an issue, but they are.

•     Don't change employment - Even if you are 20 years in the same field and just moved to the employer across the street, unless you have a employment contract the lender will want 30 days of pay from this employer before it will count. They will request a verification of employment again within 5 days of the closing.

 

•     Late payments - Do not be late on any of your current loan payments. This could sabotage your approval.

 

•     Do Not add any additional debt. If you do, you will have to go through the Underwriting process again and will have to qualify with your new debt to income ratio. If you do not qualify, your approval will be rescinded.

 

•     Do Not have any new inquires on your credit report This could delay the closing or potientially change your approval. Lenders are looking for new debt. 90 days same as cash is still debt.

 

    Lenders now will do what is called a "Soft Pull" on your credit report within 10 days of closing. any of the last 3 above that changes, will need to be addressed. The stories I could tell of the scheduled closings that did not happen because someone wasn't thinking. So just wait until you have closed to buy the new furniture.

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Greg Miller   
Mortgage Loan Originator 
NMLS # 234777
www.Ruoff.com
gregm@ruoff.com

941-552-9989


Comments (8)

Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Very good points, Greg.

At times, I have to educate my buyers and tell them why not to buy a car just before buying a home with garage..

Feb 03, 2011 06:58 AM
Mary Stewart
HomeTrust Real Estate, LLC, Homes for Everyone - Wilsonville, OR
Wilsonville and Surrounding Portland Metro Areas

These are good reminders of how we need to talk with our buyers.  This is something I do on a regular basis when talking with my buyers prior to going in for their loan.  I have had some buyers not understand the concept of not using their credit cards because they feel if they pay them off each month it should not be an issue.  I have always felt it could be an issue and potentially cause them to not be able to close on the loan.  Thanks for the great insight.

Feb 03, 2011 07:50 AM
Greg Miller
Ruoff Home Mortgage - Sarasota, FL
Florida Home Loans - Conventional,FHA,USDA,VA

Praful - I wish I had a dollar for every credit report that I pulled and had 1 or 2 pymts. on a auto loan showing and they are out of DTI.

Mary - I just dealt with a approval that is waiting to close and they purchased a cruise for the family on a credit card to the tune of $7k . Six months from now . Couldn't it wait another week ???

Feb 03, 2011 08:04 AM
Karen Burket
Bank of Oregon a division of Willamette Valley Bank - Medford, OR
Valley Mortgage Grou, Conventional, FHA, VA, mortgages

Great post, Greg!  I was actually just organizing some memos and guideline changes pertaining to just this topic. 

While fortunately, I haven't had a deal go sideways because of all these new requirements, they do happen.

Co-worker had an issue come up a few months ago as during the loan process the borrowers co-signed for their kid's student loans.  YIKES!

 

Best~

Karen

Feb 03, 2011 08:48 AM
Greg Miller
Ruoff Home Mortgage - Sarasota, FL
Florida Home Loans - Conventional,FHA,USDA,VA

Thanks for your kind comments Karen- Ah yes the old student loans co-sign, ironically just had that today. Pulled a report for a couple wanting to refinance. They are perfect, except for the 8 student loans they co-signed for, on behalf of a daughter.  Needless to say it put their debt ratio out of whack and I can not help them.

Feb 03, 2011 10:36 AM
Navona Hart
Real Living Cornerstone - Farmville, VA
Selling the Best Properties in Central Virginia

Greg the "soft pull" as you call it has gotten several of my agent's buyers.  good advice here.

Feb 04, 2011 02:06 PM
Michelle Gibson
Hansen Real Estate Group Inc. - Wellington, FL
REALTOR

Greg - This is something ALL buyers need to know, great information.

Feb 05, 2011 01:14 PM
Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

When working with buyers you can't skip talking about these items !!!!!!!! Thanks !

Jun 11, 2011 02:11 PM