Things to Avoid & Other Mortgage Horror Stories
Before you begin the mortgage application, take note of the list of actions to avoid during this critical time of your home purchase. Many of these come from real situations. Don't be an honorable mention here,
Don't buy big-ticket items. It doesn't matter if they are on sale because you won't have anywhere to put them if your loan is declined. This includes appliances, electronics, vacations, cars or expensive furnishings. Just hang on, or call me first so I can talk you down.
Don't go job hunting. Consistency in your career history is a good thing to lenders. However, switching jobs in the middle of the approval process may affect your approval. Don't give notice or accept the new position during the purchase unless you understand it may stop or slow down the process of getting your loan while we wait for the first paycheck.
Don't switch banks or move around cash. While this won't kill a loan (if the funds can be documented), you might want to kill me because the paper trail will be thorough. Most lenders will instruct the submission of recent bank statements of all of your accounts: savings, checking, money market, and other liquid assets. The lender looks for a consistent rise and fall of your money over the month, in order to avoid fraud. Even for innocent purposes, moving around cash or switching banks will be verified in your account history, and while that seems easy, sometimes it opens up examination of other items in your statements. Please avoid it!
If you are refinancing, make sure your floors have flooring and wires are within code, and your deck is not rotting off the side of the house to the point it is unsafe. Yes, really. While the appraiser is there to assess for value, blatant code violations like an exposed outlet or missing light fixture that the appraiser can clearly see will be noted in your appraisal, and re-inspection will be necessary and costly, typically $100-$150. Don't give the appraiser a reason to come back.
Don't make a chunky mortgage payment in the middle of a refinance. I am going to ass-u-me that you are only going to make a regular payment for your mortgage during this process and I need you to ONLY do that. IF you want to pay down your mortgage, tell me! We can make sure you write a big check at closing! Everyone will know you love your beautiful home and want to own it fully.
Both Alimony and Child Support are debts deducted from income. Unfortunately, this is not a game of don't ask, don't tell. I think of these items as debts so when I ask for debts, just go ahead and mention all of them. By avoiding the mention of any debts, you are putting your earnest money at risk as well as everyone's time.
If something big is coming down the pike, let me know. Getting a loan, strangely enough, is an art form. Sometimes things are more complicated and time consuming than originally thought. If your job is changing to part-time in a few months, you need to look at how you are going to qualify at that time. Please don't wait until we are in the middle of the transaction and no longer qualifying to make mention of these life changes.
Have you filed your tax return? Yes, we will need an official extension with estimated taxes paid. Even if I don't request your tax return, the lender may go to the IRS to make sure you filed. If it is not filed and not extended, we have a closing delay. Just know, the topic is not avoided even if the return is not in your loan file.
Read your tax return before you sign it. It is hard to believe that even accountants make errors, but they do! I should not be the first person to read your tax return and finding the error. It's a big deal because if you need that return to qualify and have to file a corrected return, we cannot proceed until the IRS records it, typically a minimum of three weeks.
Big Cash Deposits in the Bank may have to be documented Do you have any large deposits (and by large, I mean over your normal paycheck) that might be easy to explain but hard to document? Let me know so we can tackle this issue early on.
VA loans are for Qualifying Veterans but not all Veterans Qualify Please go to my VA page and file for your Certificate of Eligibility. There is no reason to have the lender do this for you . All the links you need are on that link.
Send in your paperwork early. Sometimes things start moving really fast and the last item on your agenda is sending in the paperwork for your loan. If what you thought it said is not what it actually says, we could have a problem to solve. Getting information early on is the best way to prevent delays at the finishing line.
Ok--this is not every crazy thing that happens in this business, but let's avoid pitfalls and keep your file on track. I am happy to answer any questions about this process.