Things to avoid during the mortgage process

It's our goal to get your client into their new home quickly. Here are some tips to help your client prepare – things to expect and avoid.

Making large cash deposits or moving funds without documentation

Underwriters generally require 2-3 months documentation of large transfers and deposits within an applicant's accounts. This ensures that the source of funds are acceptable for the specific loan program. Transfers made too close to the desired closing date can cause delays with closing the transaction.

Major changes in credit

Actions such as paying off delinquent accounts, closing dormant accounts and opening new accounts can bring an applicant's credit score down and affect their debt-to-income ratio calculation. Underwriters do a final credit check right before closing to see if anything major has changed since the start of the application process, so it's best to leave the credit profile alone immediately before and during the mortgage process.

Gaps in employment

Even if a client's overall income doesn't change, a change in employer or employment type can have a major impact on their ability to get a loan. Some examples include: switching salaried employers, changing from a salaried position to self-employed role or switching tax filings from being a sole-proprietor to incorporating as an S- or C-Corp. Since self-employed, commission or bonus incomes tend to vary over time, mortgage underwriters typically want to see a consistent 2-year history of earnings. Any changes affecting these types of income may negate a lender's ability to include them on the application.

Making large purchases

If an applicant spends some of their funds on major expenses before closing, such as pre-ordering appliances or furniture or buying a new car to park in the garage of their new home, that leaves them with less remaining money to qualify for the mortgage. Banks have requirements for the amount of remaining money an applicant needs after closing, so making major purchases during the process could affect their ability to qualify.

 Things your client should expect:

· Save and submit all future pay stubs

· Save and submit all future bank statements (complete with all pages)

· Keep copies of all documents submitted to processing

· Continue to pay all debt and loans on time

You should never assume a transaction isn't viable without talking to our team about it first. We are extremely creative and resourceful when it comes to overcoming challenges that other lenders can't get past. Contact us today to discuss any relevant issues you may be experiencing— we are here to help! 

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