Things To Avoid During Mortgage Process
This article will cover things to avoid during mortgage process to close on time. When mortgage loan borrowers seek a purchase or refinance mortgage loan, the loan officer will initially review a borrower’s full mortgage loan application and credit scores. Other documents will be required and reviewed, such as the following:
- Two years of tax returns, W2s
- Recent paycheck stubs
- Two months of bank statements
- Other documents required to process mortgage loan
In the following paragraphs, we will cover things to avoid during mortgage process so you can avoid stress and close on your home mortgage loan on time.
Reviewing And Processing Loan To Prepare For Underwriting
The loan officer will then analyze it and see if the borrower meets all loan program guidelines and their lender overlays. The loan officer will decide whether there is a deal or not. In most cases, the loan officer will be able to predict whether or not the mortgage application will be able to get mortgage approval.
If the loan officer is confident that the borrower meets all the lending requirements, the loan officer will submit the signed mortgage application and loan package for processing and underwriting.
Conditional Loan Approval
Once the underwriting department has reviewed the mortgage loan application, it will be submitted to underwriting. If borrowers meet all guidelines and requirements, they should get conditional mortgage approval. Conditional loan approval does not guarantee the mortgage loan will close on time or even if the mortgage will ever close. Here is what Dale Elenteny of FHA Bad Credit Lenders says about a conditional mortgage loan approval:
Getting a mortgage approval does not guarantee borrowers that the mortgage loan will get clear to close, funded, and closed. Staying approved until the mortgage loan closes is what is important.
Until the mortgage loan closes, the lender can always revoke the approval if there are changes in the borrower’s financial and credit profiles.
Mortgage And Closing Delays Can Always Happen
Most mortgage approvals take no more than 48 hours upon being processed and submitted to underwriting.
Conditions can take up to a week or more.
However, closings can be delayed, not because of the buyer, but because the subject property might be a foreclosure, short sale, estate sale, or HUD/FANNIE MAE property. There are cases where closing delays can push 90 or more days. Once a borrower has gotten a mortgage approval, they must stay approved, and no hiccups can happen. Otherwise, that mortgage approval can be a denial.
Do Not Change Jobs During the Mortgage Process
Changing a W2 job to a commission job will cause a mortgage denial in a heartbeat. Do not close out current bank accounts and open new bank accounts.
Do not transfer large amounts of money from one account to another account. This will cause a paper trail nightmare for the loan officer, processor, and underwriter and will cause aggravations and delays in the mortgage loan closing. Do not have any late payments.
One late payment will drop credit scores by 80 or more points. This will be grounds for a mortgage loan denial. Do not dispute any credit derogatories even though the credit reporting agencies made a mistake. Borrowers cannot have a credit dispute during the mortgage approval process.
Do Not Apply for New Credit During the Mortgage Process
Things to avoid during mortgage process is applying for new credit. Other causes for mortgage denials include applying for new credit. Do not, under any circumstances, apply for new credit, especially credit cards. Angie Torres, the National Operations Director at FHA Bad Credit Lenders, said the following about hard credit inquiries:
Each hard credit inquiry will drop credit scores by 5 points or more, and borrowers will need a letter of explanation for why they are applying for new credit.
Many homeowners are so antsy about moving into their new home that they often apply for credit at furniture shops and other retail stores where they offer no interest for up to a year. A large purchase can bump the borrower over the required debt-to-income ratio and kill the approval of the mortgage. Do not accept gift funds unless borrowers have contacted their loan officer and supplied the proper documentation and gift letters.
Avoiding Irregular And Large Deposits Are Things To Avoid During Mortgage Process
During the mortgage approval process, things to avoid are depositing large amounts of undocumented cash in bank accounts. Unless documented and sourced, do not deposit or withdraw over $200.00 to any bank account.
- Do not co-sign for anyone under any circumstances until borrowers close on the mortgage loan.
- Borrowers unsure of their financial and credit matters, please call their loan officer before taking action.
- There are no such things as common sense in the mortgage business.
If you have any questions on things to avoid during mortgage process to close on time, please contact us at FHA Bad Credit Lenders at 262-627-1965 or text us for a faster response. Or email us at gcho@gustancho.com. The FHA Bad Credit Lenders team is available seven days a week, evenings, weekends, and holidays.
Unexpected Circumstances During Mortgage Approval Process
Any unexpected financial and credit profile changes or personal life can affect the mortgage approval. A job loss, for example, will probably cause a mortgage denial since borrowers no longer have the supporting income. Sickness and medical issues are beyond the borrowers’ control. But if borrowers take time off work due to an illness or sickness, this can affect their mortgage approval. Mortgage underwriters do not look at personal problems. They are just concerned about facts and numbers.
Things That Can Revoke Mortgage Approval
Because you got a conditional mortgage approval, do not assume everything is okay and the mortgage loan will close on time. There are things to avoid during mortgage process, and certain things can revoke conditional mortgage approval.
Do Not Purchase New Vehicle During the Mortgage Process
First and foremost, please do not purchase a new vehicle or trade up a vehicle where it will increase your monthly automobile payments. Do not quit your job during the mortgage approval process or take on another better job offer because this will cause a delay in closing. If borrowers quit their job and take on another job, they need to supply 30 days paycheck stub and verification of employment from their new employer to close the mortgage loan.
Do Not Change Jobs During the Mortgage Process
Changing a W2 job to a commission job will cause a mortgage denial in a heartbeat. Do not close out current bank accounts and open new bank accounts.
Do not transfer large amounts of money from one account to another account. This will cause a paper trail nightmare for the loan officer, processor, and underwriter and will cause aggravations and delays in the mortgage loan closing. Do not have any late payments.
One late payment will drop credit scores by 80 or more points. This will be grounds for a mortgage loan denial. Do not dispute any credit derogatories even though the credit reporting agencies made a mistake. Borrowers cannot have a credit dispute during the mortgage approval process.
Do Not Apply for New Credit During the Mortgage Process
Things to avoid during mortgage process is applying for new credit. Other causes for mortgage denials include applying for new credit. Do not, under any circumstances, apply for new credit, especially credit cards. Angie Torres, the National Operations Director at FHA Bad Credit Lenders, said the following about hard credit inquiries:
Each hard credit inquiry will drop credit scores by 5 points or more, and borrowers will need a letter of explanation for why they are applying for new credit.
Many homeowners are so antsy about moving into their new home that they often apply for credit at furniture shops and other retail stores where they offer no interest for up to a year. A large purchase can bump the borrower over the required debt-to-income ratio and kill the approval of the mortgage. Do not accept gift funds unless borrowers have contacted their loan officer and supplied the proper documentation and gift letters.
Avoiding Irregular And Large Deposits Are Things To Avoid During Mortgage Process
During the mortgage approval process, things to avoid are depositing large amounts of undocumented cash in bank accounts. Unless documented and sourced, do not deposit or withdraw over $200.00 to any bank account.
- Do not co-sign for anyone under any circumstances until borrowers close on the mortgage loan.
- Borrowers unsure of their financial and credit matters, please call their loan officer before taking action.
- There are no such things as common sense in the mortgage business.
If you have any questions on things to avoid during mortgage process to close on time, please contact us at FHA Bad Credit Lenders at 262-627-1965 or text us for a faster response. Or email us at gcho@gustancho.com. The FHA Bad Credit Lenders team is available seven days a week, evenings, weekends, and holidays.
