Many people have been there; apply for a mortgage only to feel like it is taking forever to be approved.
The lender, on the other hand, is verifying all of the information that was submitted, waiting for replies and putting the loan file together.
Since no one can say for certain how long this can take, borrowers can sometimes get lax and forget that their credit is diligently being checked.
In order for the process to go smoothly from start to finish, there are some things that a borrower should refrain from doing.
Once someone knows that they are going to apply for a mortgage or they are already in the process, large purchases should not be made either through credit cards, a new loan or special credit offers.
Any of these actions can appear on the credit report and ultimately reduce the credit scores and increase the debt to income ratio.
The debt to income ratio is not only an important part of determining the mortgage rate, it can completely ruin the loan if it is too high.
Even new credit cards that are accepted become open credit and will work against the borrower.
Before or during the mortgage process is the best time to concentrate of paying down other debt, not increasing it.
A lender can pull credit at any time from when the application is submitted until the loan actually closes.
If changes are found that significantly change the borrower's credit standing, the mortgage approval can be denied.
-During this time, it is not advised to make large deposits to bank accounts.
Lenders must look at account balances in order to make sure that there are enough funds for the transaction.
However, lenders also look at bank accounts for unusual activity, such as large and unexplainable deposits.
Any large deposits, especially those made with cash, will be questioned and will need to be backed with documentation.
Even if a lender uses a Verification of Deposit to check account balances, a large deposit will be noticed because the average balance for two months will differ.
When funds cannot be sourced, the borrower will have to wait at least two months, or maybe three, for the funds to season and the loan to close.
-In the meantime, once the application process has started, the borrower should not use the available assets they have for other things related to the loan.
These funds are being counted as assets for the loan; for the necessary reserves, closing costs, down payment, etc.
Until the transaction has closed, borrowers should consider these funds as already spent so that they have the money to finalize the transaction.
It is not unusual for borrowers to head to closing without enough money to close the deal.
-Changing employment during the mortgage process can become a major issue.
Lenders collect up to date pay stubs for a reason; to prove income and stability.
If employment is changed, there may not be any pay stubs to offer which may delay the process.
Employment should remain the same throughout the loan process including the day of closing.
Lenders can re-verify employment even on the day that the papers are signed.
When planning to apply for a mortgage or actually in the process, be wise with your actions.
Some of the simplest mistakes can create a problem and cause the mortgage to be denied.
Remember that the lender is looking and considering everything they see before an approval will be issued.
Once the approval is given, they may still be watching even on the day of closing.