The Ten Commandments of Mortgage Financing
- Thou shalt not change jobs, quit your job or become self-employed during the loan process. Your current (not potential) income is used to support your qualification of your mortgage loan – if you change this before the loan closes you may not qualify as your application would have to be re-underwritten to support your job change.
- Thou shalt not co-sign for any loan for any one. Your qualifying ratios are based upon your reported liabilities and your qualifying income. If you add additional liabilities into your ratios by co-signing for someone, you may no longer qualify.
- Thou shalt not buy a vehicle or any large purchase during the loan process. Inquiries on your credit report are also viewed as part of the underwriting process and all inquiries generally within the last 90 days must be explained. So, even shopping for a car may be addressed by the underwriter.
- Thou shalt not use credit cards excessively and thou shalt make all payments on time. Keep in mind your credit is generally ran at origination and again at closing by the underwriter as part of the pre-funding audit, so any late payments or increases in your reported monthly payments will be addressed prior to closing your loan.
- Thou shalt not spend funds you’ve set aside for reserves. Even though you generally must provide a Verification of Deposit to evidence the available reserves, if you spend the funds prior to closing, you jeopardize delaying your closing or even loan denial.
- Thou shalt not omit any liabilities or debts on the loan application at origination. Underwriting prudence requires that all your debts and obligations be considered to support qualification for mortgage financing. Any qualifying debt found during the analysis process will be included whether it is reported or not, but better to disclose than explain – it will give your Mortgage Broker a strategy to help assist you in the qualifying process.
- Thou shalt not finance any furniture, appliances or household items during the loan process. Many homeowners are anxious to furnish their new home, however save this until after you receive the keys. Remember, even those “No Interest Until 2017” credit offers affect you. The underwriter will generally use a percentage of the total credit line you received to calculate the payment and count that against your liabilities. If those ratios have little “wiggle room” a credit trade line like this could make all the difference.
- Thou shalt not make large deposits into your banking institution without first checking with your Mortgage Broker. All large deposits require an explanation to the underwriter. If you’re expecting a bonus deposit from your employer, a gift from your grandparents or a refund from your tax returns, share that information with your Mortgage Broker – it will help him/her present your complete loan file with this information disclosed upfront.
- Thou shalt not change banking institutions during the loan process. Remember, asset guidelines generally require the account stated to have been open for at least 90 days, so a new account would not qualify.
- Thou shalt not ignore your Mortgage Broker’s emails or calls. This will ensure that all parties remain informed of the loan progress and that your loan closes smoothly and on time.
The Mortgage Alliance Advance Mortgage Team,