The last thing you want is a delay in your mortgage process, especially if you are purchasing a home. You have a deadline to meet, but you must comply with the lender’s rules in order to meet it. If you don’t follow the rules, you could seriously delay your mortgage processing.
Are you afraid of falling in that bought? Use these five simple steps to help you avoid any delays in your mortgage approval process.
Be Honest With the Lender
It’s easy to embellish a little bit when the home of your dreams is on the line. Here’s a bit of advice though – don’t do it. The truth will come out eventually. With all of the red tape mortgage lenders must go through today, they verify everything. They cannot take your word for anything. If it’s not on paper and documented several times, they cannot use it for qualifying purposes.
So what does that mean for you? Be upfront with the lender. Honestly, it helps you in the end anyways. The more honest you are, the more likely it is that the lender will line you up with the right program. For example, if you fib and say you only have a ‘little’ debt, when in reality, you have more than you can handle, it could derail your loan approval.
No matter how risky you think a factor is, tell your loan officer. He’ll tell you upfront what you might face. But, he may also have other loan programs that you’ll qualify for easier given the circumstances. Wouldn’t you rather know this information up front?
Provide All Documentation Right Away
It’s impossible to know every single piece of paper your lender will need, but there are some basics you can get ready immediately:
- Last month worth of paystubs (4 if you are paid weekly, 2 if you are paid bi-weekly)
- Last 2 years of W-2s for every job you have held in that time
- All schedules of your tax returns for the last 2 years (especially if you are self-employed)
- All pages of all investment or asset statements (even the blank pages)
If you own a business, be prepared to provide all financial statements pertaining to your business. You’ll also need to provide proof of a fully-paid homeowner’s insurance policy before the closing.
Providing the lender with a full package up front can help speed the process along. However, when the underwriter asks for more documentation, act fast. The longer you take, the longer it takes for your mortgage process to go through.
Work Closely With the Seller
If you are buying a home, the purchase contract is a vital piece of information for the lender. No matter how well you qualify for the loan personally, the home must pass the requirements as well. The fully expected purchase contract will give the lender some information. However, you also need to work with the seller to get the appraisal and inspection done right away.
You can’t control when the seller allows the appraiser and inspector in the home, but keeping a good relationship with the seller can speed things along. The longer the seller delays, the more the mortgage process is at a standstill. The lender cannot move forward until they know the value of the home as well as its condition.
If you have an inspection contingency on the home, you’ll need to complete the inspection within the allotted time. If you miss the expiration date, you miss your chance to back out of the contract without financial consequences. This gives the lender the chance to review it as well to make sure the home meets the specific requirements of the loan program, such as FHA or VA requirements.
Don’t Use Your Credit Cards
If there’s one golden rule while you go through the mortgage process, it’s to freeze your financial life. Don’t make any large purchases during that time. You might think the lender would never notice since they already pulled your credit, but you’re wrong. The lender will pull your credit a minimum of one more time before you close. You have no way of knowing when that final time will be. It could be on your closing date.
How will you know if your credit card reported your new purchases to the credit bureau yet? You won’t. You live your loan approval to chance this way. If your credit card balance increased, your credit score may drop. The lender will also have to go back to the drawing board and figure out your debt ratio to see if you still qualify for the loan.
The entire loan process could be interrupted with just one purchase.
Don’t Make Large Deposits in Your Bank Accounts
Along the lines of freezing your credit is the need to avoid adding funds to your investment accounts. Small deposits are okay. Large deposits send up a red flag. The lender will ask to track those funds. In other words, they need to see where they came from if they cannot be tied to your income.
Basically, the lender wants to know if someone lent you money, if you got a gift, or if you took a cash advance on your credit card. Any type of loan affects your debt ratio and possibly your mortgage loan approval.
Avoid making any deposits other than your standard income if you can. If there is money you must deposit, talk to your loan officer about it beforehand. This way he can tell you what you need to do if you must use the funds for your mortgage.
These simple steps can help you avoid a serious delay in the mortgage process. Even delaying your closing a few days can cost you hundreds of dollars. In some cases, it could even cost you the home if the seller cannot wait. Take these steps seriously and move your process along as quickly as possible!