When it comes to buying or refinancing a home, what seems like a minor detail can make a big difference. If you are about to embark upon either of these processes, be sure to review the warnings below or reach out to us at any time. Our mortgage professionals are fully familiar with what to do and not to do to ensure that your mortgage loan closes smoothly — and avoids unnecessary expense.
1. Don't Buy or Lease an Auto
The lender (us!) looks carefully at your debt-to-income ratio (DTI). A large loan or lease payment can greatly impact your DTI, possibly preventing you from qualifying for a home loan.
2. Don't Transfer Bank Accounts or Move Assets from One Bank Account to Another
Often borrowers want to move money to one account so that funds for the home transaction are easily accessed. Transfers from one bank to another may show up as new accounts, however, and transfers from one account to another will show up as large and unidentified deposits, both of which must be explained. In this case, you must disclose and document the source of funds for each new account, which can delay the loan process. Your lender will verify each account as it currently stands, and make the underwriting decision based on that information; you may consolidate your accounts after the loan closes.
3. Don't Change Jobs without First Letting Us Know
The lender will verify that you have a steady stream of income to repay the loan. A new job may involve a waiting or probationary period, which must be satisfied before income from the new job can be considered for qualifying purposes.
4. Don't Buy New Furniture or Major Appliances
As mentioned above, if the new purchase increases your debt-to-income ratio (DTI), it could disqualify you from the loan or deplete your funds to close the loan. Furniture and appliance loans that are deferred for a year or 90 days same as cash must still be considered in your DTI.
5. Don't Run a Credit Report on Yourself
This will show as an inquiry in your lender's credit report, and inquiries must be explained in writing. Contact us if you have questions.
6. Don't Attempt to Consolidate Bills Before Speaking to Us
Often credit reporting agencies have a delay in reporting changes. This means you may actually show more debt outstanding and a higher DTI, initially. An additional problem could be the reduction to your credit score.
7. Don't Pack Information Needed for the Loan Application
When preparing for your move to your new home, do not pack important paperwork such as W-2 forms, divorce decrees, military service orders or discharge, and tax returns with your household goods. Duplicate copies can take weeks to obtain.