Yogi Berra, the famous New York Yankee catcher, should have been a part-time loan officer. It was he who once said, “It’s never over till it’s over.” He must have been referring to the time period between a mortgage application and a mortgage funding.
More than a few buyers have had the wind knocked out of their sails at some point in a real estate transaction by making the wrong move during the application process. Here are six suggestions to help keep your mortgage application voyage stay on course.
1) Do not take on new debt. The temptation is strong. There are so many big purchases that people want to make in connection with a move: appliances, window treatments, furniture, etc. When you add to this the fact that, today, everyone offers easy terms and no money down - well, why not just do it? Answer: because you will change what the mortgage industry calls your “debt-to-income ratios” (the relationship of your income to your debt).
2) Do not change jobs. If at all possible, try not to make a career move during the time between your mortgage application and the closing on the home you are purchasing. But, you ask, “What if it’s a BETTER job, for MORE money, in the SAME field?” Stay put. Try and wait until AFTER closing. One of the factors mortgage companies consider is length of present employment and they are partial to stability. At the very least, changing jobs initiates the need for more paperwork, and may delay your closing.
3) Continue making your payments on time. Don’t be late on any payments. If you do miss a payment, ask for mercy. Beg the creditor to grant you a “courtesy waiver” due to poor organizational skills and get them to immediately remove (or ignore) the late payment. Sometimes, a creditor can grant a “one time” courtesy waiver of a 30 day late payment. Keep your credit report clean during the process.
4) Keep your credit cards balances low. Do not buy items with credit cards and carry balances for long periods. The interest on most credit cards is too high. If you push the balances on your credit cards to their limits during the process, you can and will seriously impact your credit scores even if you make your payments on time. This may “pop up” during a final quality control review of your file prior to funding the loan. 5) Communicate with your lender. Don’t go on vacation or have a mid-life crisis during the processing of your loan. If you are going to be unreachable due to vacation plans or any other reason, tell your lender. Things develop during the loan process and the loan officer or processing staff may need to get a hold of you prior to the loan funding. Always be “on the same page” with the lender.
6) Tell the whole story. If you have a credit judgment or a lien or a past derogatory item, tell the “whole truth and nothing but the truth” to the lender. Lenders understand the “life happens” and that nobody is perfect. Tell it like it is. Prior to funding a loan, a credit report is run, a property search is performed (for past judgments and/or liens), and asset and income information is verified. It’s better to deal with any “bumps on the road” up front or else these bumps could transform into funding “land mines.”
These suggestions are merely that — suggestions. No one is saying, flat out, that bad things will necessarily follow if you don’t abide by the 6 tips listed above. They are offered as cautions. Many buyers seem to view the mortgage application procedure as a static action — a snap shot of their financial lives at a given moment in time. It’s not. It’s an on-going process that takes into account everything you do right up until the day of closing.
PAUL E. SCHEPER (MBA, Harvard, USC, CSA, AAGG) is a licensed real estate mortgage broker (since 1984) and a proud member of OCAR. He is Vice President of Trust One Mortgage Banker in Irvine, a direct lender specializing in FHA/VA retail and wholesale lending. If you have any questions, he can be reached at 949.709.7115 or via his website at www.PaulScheper.com.
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