Preparing for Your Mortgage Approval

The “Do’s & Don’ts” of the home loan process

Increased federal and state regulations governing today’s mortgage financing, both lenders and borrowers are having to work within stricter guidelines. Unstable rates also can make the process a bit more touchy as rate changes can affect the affordability factor for a homebuyer. To improve your experience, here are some helpful tips and good habits you should keep in mind to help secure a successful loan approval. Have questions? Want help getting started? Complete our Quick Start Form and we’ll connect you with a loan officer that matches your specific needs. They’ll provide a free consultation and guide you through every step of the loan application process.

Good Habits: DO’s

Consult With A Loan Officer BEFORE Going To Look At Homes

It is important to speak with a lender before you go to look at homes, this allows you to talk through what loan programs are available to you and which ones are the best fit for your situation. Lenders come in many shapes and sizes, it is crucial to find one that you feel comfortable with because they are going to be by your side through the whole transaction. Sorting this out prior to looking at homes means you won’t get your heart set on something that isn’t going to be affordable for you.

Keep Tabs On Your Credit

It is advisable to check on your credit report at least annually, quarterly is even better. There are free, reliable resources available to monitor your credit report itself to ensure that there is nothing inaccurate on the report. While many sites offer insight into your credit score, they may not provide a full report…during your approval process we will look at the full credit report including each line item as well as the scores themselves.  Get your free report here! Before calling your favorite lender, make sure that you check your report for any accounts, names or addresses that you don’t recognize. We will pull a report that merges all three major credit bureaus: Equifax, Experian and Transunion.

Pay Bills On Time

Keep paying your bills and financial obligations on time including any mortgage, car, credit cards, child support/alimony, student loans, etc. Continued timely payments will help to show your patterns of willingness to repay your obligations.

Inform Your Loan Team Of Employment Changes

Please inform us in advance of any employment or income change; if you have already been pre-approved or are in the middle of the process you will still need to let your loan officer or processor know immediately when you find out about changes to your income status, pay structure or employer themselves.

Keep Pay Stubs And W2’s

Keep copies of all pay check stubs you receive between now and your loan closing. Most loans require the last two years w2s (or 1099s) for any jobs you have held in the last two years as well as year to date paystubs to show your earning patterns. If you receive any income outside of base income, also be prepared to supply the last paystub of the year for the last two years.

Create A Non-Negotiable List

It is advisable to create a list of things that you would like your future home to have; then take this list and honestly decide which are the top priorities and you would consider must haves. Homebuying can be stressful and if you go see a home and love it but so do others, you could get into a situation where more than one person is trying to buy the same home. If this happens, you have to have something to refer back in order to remind yourself what is most important even when having to make quick decisions!

Respond Quickly

When your loan officer or processor requests documents from you or asks a question, it is important for you to answer promptly (typically within 24 hours) in order to keep your process on track.

Going Out of Town?

Please call us if you are going out of town or planning a vacation so we can plan accordingly for your loan process.

Potentially Harmful: DON’Ts

Don’t Opening New Accounts

The mortgage approval process relies heavily on the information provided continuing to be accurate and not changing majorly. This means you should avoid, when at all possible, applying for or opening new accounts. Applying for a new credit card or loan can majorly effect your approval, it is best to avoid this but if you must do so it is something you should discuss with your loan officer BEFORE doing. Please note this also includes co-signing for someone else.

Buy New Furniture Or Increase Your Debt

As referenced above, you avoid having your credit pulled for any reason – generally if they ask for your social security number they will be pulling your credit. Even if the offer is really appealing – like 0% for 12 months – it still can hurt your approval. Also, you need to keep in mind that making any purchases out of the ordinary can be a flag in the process. IE going out and buying all new furniture in cash, which avoids putting it on credit but wipes out your assets or reserves could change your approval status.

Home Improvements

Don’t start significant home improvements; you don’t own the home yet so be very cautious about any investment of time or money prior to closing on your home.

Paying Off Collections or Charge-offs

Don’t payoff collections or charge-offs during the mortgage process. Unless we specifically ask you to, do not go out and make any major changes to credit during your homebuying process.  Often, paying off old collections or charge-off accounts can cause a drop in your credit score.

Buy A New Car

Don’t make any large purchases such as cars, boats or real estate until after your loan closes. If a situation arises where there is a need to do this call your loan officer BEFORE you make a decision. We would hate to see buying a new car stop you from being able to buy the home you want!

Max Out Credit Cards

Don’t increase the balances on your current credit cards, increasing the amount outstanding on your card can impact your credit score. The impact that increased balances can have on your credit can range from minor to major. IE Coming close to or going over the limit in your credit card can come with major drops in your credit score as well as fees.

Consolidate Debt

Please don’t consolidate debt right before or during the loan process. Wait until after your loan closes.

Close Credit Accounts

Don’t close credit card accounts. This can temporarily affect your credit score in a negative way. Even if it’s a card that you don’t use at all closing it can impact the amount of credit you have available to you or the overall longevity of your credit, which can impact your score.

Change your Legal Status

Call us before changing your name, address, marital status, etc. There can be impact on your mortgage process, so just keep us in the loop!

Playing With Your Money

Don’t open new accounts, close current accounts or make transfers between accounts before speaking with your loan team.

Avoid Large Cash Deposits

It is important to avoid large cash or unexplained deposits. If you’re not sure, call us first!

Don’t Keep Secrets

If you are ever in doubt about how something could impact your process, call your loan team! Feeling unsure or nervous about the process is normal, we are here to help you understand the process since we do this every day, very little can surprise us!

Of course, CALL US anytime if you are unclear or have a question about your loan. That’s why we’re here!