Buyers Thirteen Commandments for getting a mortgage loan (because ten just wasn't enough!)
So you’ve spoken to your lender and got qualified. You’ve searched high and low with your buyer’s agent and finally found THE house. You submitted the strongest offer you could and just got word back- YOUR OFFER HAS BEEN ACCEPTED!
Congratulations, but the process isn’t over yet. Now we have to wrap it up and get you closed. Most of the hard part should be done but there are so many factors that can delay or derail a closing. Please keep in mind that the mortgage process is meant to uncover surprises that then must be addressed. A good loan officer will try to foresee any issues but documentation provided will frequently raise new questions- a process I refer to as “pealing back the onion”. Since ten just doesn’t cover it, we needed to have thirteen (yea I know, it used to be just twelve but that just wasn’t enough either) commandments and in truth there are many more considerations to keep in mind. You will need to remember:
- 1. Thou shall not buy anything on credit. You would think that goes without saying, but it's hard to remember that when the appliance guy tells you “but if you finance these today I can give you hundreds of dollars off”. If it results in increased debt or even a credit pull, don’t do it until after closing.
- Thou shall not change jobs. That job offer with another similar company may mean a raise, but depending on the type of pay or even the length of a probationary period it may cost you your dream home.
- Thou shall not make large deposits to your accounts. At this point you have already realized that deposits to your accounts must be “sourced”. Even if you are using gift funds, don’t do anything without your lender’s direction.
- Thou shall pay your bills when (or before) they’re due. Now is NOT the time to dispute a purchase or pay an account late.
- Thou shall not get married or divorced. Changes in your relationship status will affect the paperwork and can delay the transaction. With some loan programs, like USDA, it can prevent you from qualifying altogether.
- Thou shall not close ANY credit or bank accounts. We addressed not opening any accounts but closing accounts can be just as detrimental.
- Thou shall not lend money or co-sign for anyone. Even if the money your friend needs to make his car payment isn’t part of the cash you need to close, your lender may be counting on those funds as “reserves”.
- Thou shall not open a new business or start self-employment. Self-employment frequently results in business losses that are subtracted from your other earnings.
- Thou shall file your taxes on time and not change the method of filing. Your new accountant says he can save you money by showing expenses you’ve never shown, but this can negatively impact the wages used to qualify you.
- Thou shall not plan extended vacations between contract and closing. If you have planned time away, notify your lender early so they can make adjustments. Going on trip within two weeks of your anticipated closing date can easily result in a delay to close.
- Thou shall keep as much flexibility as possible regarding the closing date. I have a favorite line, “the amount of pain you will feel in a real estate transaction is inversely proportional to the flexibility you have regarding your closing date”. When you absolutely, positively have to close at 4p on a specific date you are setting yourself up for disappointment. Stay flexible with movers, appliance deliveries, utilities hookups, etc. until such time as your loan is “clear to close”.
- Thou shall be honest and transparent with your loan officer. The vast majority of surprises that arise are the result of borrowers “educating” themselves via the internet (or sometimes other loan officers) and thinking they can hide or skew information. It takes many years and many deals to learn this business, don’t think you can read up on a few websites and be an expert.
- Thou shall ask your loan officer ANY questions you have regarding financing. The internet is a great place, but it’s rife with information while starving for knowledge. Also your friends and family will be eager to share their experiences and advice but every loan program is different and every deal is different.
Whenever in doubt, refer back to the 13th commandment. Your loan officer should always be there to guide you. A good rule of thumb is to not do anything that appreciably changes the information on your loan application. Although this list is far from complete, hopefully it gives you the basic idea of do’s and don’ts. If you have any questions we are always ready to help you at ExpertHomeLoanAdvisors.com.