Very Important Tips To Remember...
Applying for a mortgage loan? Here are some helpful tips to help make the process go smoothly.
Your credit, income and assets are verified after you submit your application, so following these tips throughout the entire loan process can be very important:
Please Be Sure To —
- Keep all accounts current such as mortgages, car loans and credit cards, even if an account is to be paid off at closing.
- Keep copies of all paycheck stubs and any statements of bills being paid off during or throughout the loan process.
Your Application Process May Be Affected If You¹ —
- Change employment unless it is in the same line of work and for equal or more income.
- Apply for credit or co-sign for others, which allows an additional inquiry to be made on your credit report.
- Make a major purchase, which may affect your credit or personal funds.
- Change bank accounts or transfer money within your existing bank accounts.
- Fail to properly document gift funds intended for use toward your closing costs.
After receiving your home loan approval, being aware of issues that can impact the financing process is important. The following topics address potential challenges that may delay your closing date or even impact your ability to obtain a mortgage. Follow these tips for a smoother financing process:1
- DO Inform Your Mortgage Consultant When Making Changes to Your Employment — Employment stability is a big factor in the underwriting process. Quitting, changing jobs or even changing positions in same company can greatly impact your loan approval. Inform us immediately of any changes to your job, position or income.
- DO Keep Original Documents — Keep originals of all paystubs, bank statements and other financial documents.
- DO Keep and Provide All Documentation for the Sale of Your Current Home — Provide all documents for the sale of your current home if selling it. Examples: sales contract, closing statement, employer relocation buyout program, etc.
- DO Stay Current on Existing Acounts — Late payments on current accounts like mortgage, car payment, charge cards, etc. will impact your credit score which identifies your likeliness to repay your debts. Make your mortgage payments on time but call us before you make any payments that are scheduled within two weeks of closing.
- DO Continue to Use Your Credit as You Normally Would — Red flags are easily raised within the scoring system. If it appears you are diverting from your normal spending patterns, it could cause your score to go down. For example, if you’ve had a monthly service for cable billed to the same credit card for the past two years, don’t change that now. Make any changes after loan closing.
- DON'T Apply for New Credit or Increase Any Current Liabilities (e.g. credit cards, signature loans, etc.) — Avoid making major purchases such as cars, lines of credit for furniture, appliances, computers, etc. If you receive an invitation to apply for new lines of credit or to increase existing credit, don’t respond. If you do, that company will pull your credit report and this will have an adverse effect on your credit score.
- DON'T Assume Paying Off Collections or Charge-Offs Will Improve Your Credit Score — Generally, paying off old collections causes a drop in the credit score. Don’t pay off any collections unless we specifically ask you to in order to secure the loan.
- DON'T Max Out or OverCharge Existing Credit Cards — Running up credit cards is the fastest way to bring a credit score down. Try to keep credit cards below 30% of the available limit.
- DON’T Conslidate Debt to 1 or 2 Cards or Close Credit Card Accounts — This may change your qualification ratio of debt to available credit which also affects your credit score. You want to keep an active beneficial credit history on your record. If you really want to do these things, do it after you close your mortgage loan.
- DON’T Raise Red Flags — Don’t co-sign on another person’s loan or change your name and address. The less activity that occurs while your loan is in process, the smoother the process.
- DON’T Make Large Unexplainable Deposits Into Bank Accounts — Deposit amounts exceeding past history will be questioned by an underwriter unless the deposit is a documented gift. If you are getting a gift, call (gifts require specific documentation) your Mortgage Consultant to discuss.
- DON’T Make Any Adjustments or Transfers in Your Asset Picture — Don’t change investments, move positions, close, open or transfer any savings or other asset accounts without contacting us first.
- DO Contact Your Mortgage Consultant — If you are unsure if something will impact your loan, don't hesitate to contact us. We are always available to answer any questions you have about the home financing process.
1. This list is only to be used as a guide and is not all-inclusive. Should events arise requiring changes to your credit, income or assets, your mortgage consultant can discuss how these changes may affect your loan application process. The Arkell Barnes Mortgage Team is not a credit counselor. Information displayed is not credit advice and should not be relied upon or interrupted as such.