Tips to Make Home Loan Process go Smoothly

Congratulations! You are now pre-qualified for a home loan. You are only steps away from closing on your new mortgage. Its smooth sailing from here right? Probably. However, more than one buyer has had the wind knocked out of his or her sails at some point in a real estate transaction by taking the wrong steps.

Although your loan may not necessarily be negatively impacted by doing one or more of the following, they are offered as precautions that will help ensure that your loan status does not change and, at the very least, will make the home loan process much smoother.

• Do not allow any unnecessary credit checks. The credit checks involved with financing offers and promotions are harmless, right? Wrong! Excessive credit checks may lower your score, leaving you unqualified for the home loan.
• Do not take on new debt. There are many things that you may want or need to purchase for your new home or in general before closing. However, opening any new account will affect your debt-to-income ratio, could affect your credit scores and could possibly affect your approval status. Additionally, maxing out your existing credit could hurt; please avoid all large credit purchases and try to keep accounts at or below the balances reflected during your initial application. Do not close any existing accounts until after closing as doing so could affect your scores as well.
• Do not pay off debts for others. If the loan is not in your name, do not pay it off directly or the debt may be counted as your monthly obligation. Please contact your loan officer if you must pay off others’ debts or lend money to others (including your spouse).
• Do not move money around. All transfers need to be fully documented; movement between accounts can therefore extend the underwriting process and possibly delay closing.
• Do not make large deposits. Again, all funds need to be fully documented; any deposits over $500 or more will need a letter of explanation and supporting documentation verifying where the funds originated. The only gift funds acceptable must come from relative and will require specific documentation – please contact your Loan Officer immediately if you plan to deposit gift funds. Please avoid cash deposits at all costs as they cannot be traced properly.
• Earnest Money Deposits will need to be documented. Do NOT pay these in cash as they will need to be documented. Please use funds from an easily tracked source (checking or savings accounts, etc.).
• Keep reserves in your bank account. A large decline in bank balance could cause approval problems. Please try to keep as much (if not more) funds in your account as you reported on your initial application. Additionally, avoid overdraft or NSF fees at all costs! These are NOT easy to overcome.
• Do not change jobs. If at all possible, try not to make a career move during the time between your mortgage application and closing. A career change, even if you are making MORE money, may require a longer history before the income can be included on your loan application. At the very least, changing jobs initiates the need for more paperwork and may delay closing.
• File your taxes. If you have not filed taxes in the past 2 years contact your Loan Officer immediately. They are required to receive tax transcripts directly from the IRS in order to close on your new home. The only exception is if you did not have taxable income and were therefore not required to file.
• Inform your Loan Officer of tax deductions. Standard deductions should not affect your approval status, however, unreimbursed business expenses, real estate losses, etc. will need to be taken into account and may affect your loan approval.
• Do not pack too soon. Well, go ahead and pack your clothes and dishes. But do not pack your bank statement, tax returns, or other important paperwork. Especially, do not pack your checkbook! More than one buyer has had closing delayed while a friend or relative hurried over with additional funds because the checkbook was in the moving van.
• WHEN IN DOUBT, CALL YOUR LOAN OFFICER. A quick phone call can save a lot of time and trouble.