Assuming you have already decided to get a mortgage loan or a refinance, we can discuss a few common do’s and don’ts while you are in the process of getting one. This way you can avoid any pitfall that could lead to cancellation of the loan that you and your loan officer have been working so hard.
Preparation
It doesn’t matter if you are getting a loan or a refinance, what is important is that you prepare well before you apply for the same. It includes in making sure you have all the documents ready like your W2’s, pay stubs, home owner’s insurance, bank statements, etc. Keeping your debts to a minimum could be a great help.
Check your credit score before you apply and make sure there are no discrepancies on your credit. Even if there are, get in touch with the respective creditor or the credit bureau to get it resolved before you apply. If you are planning to buy a new house make sure you know how much you can afford before shopping for the house
Do’s
1. If you are planning to get a new house make sure you get pre-approved before you start searching for a house. This will give your real estate agent a better idea on what kind of properties to shortlist according to your qualification. This way you can save a lot of time by only looking at properties that match your budget.
2. Make sure you have enough savings for the down payments on the purchase of your new property. This way you are ready with enough funds at the time of closing.
3. Make sure you are always available to communicate with your real estate agent and loan officer. There could be some important information that they would need to get through you. Delay in communication could cost you time and money.
4. Make sure you ask any questions that you might have in your mind to your loan officer or your real estate agent. By asking the right questions you can get a better understanding of the process and avoid any miscommunication.
5. Discuss the terms and conditions of your loan with your loan officer to get a better knowledge of the type of loan, your monthly payments, and closing costs. This would help you to manage your monthly expenses.
6. It would be a great help if you keep your assets as stable as possible during the process of the loan. If there are any changes you need to do please ensure you discuss them with your loan officer in advance to avoid any last-minute pitfalls.
Don’ts
1. Not sharing important details like any lawsuits, layoffs, child support, liens, etc. with your loan officer, could disqualify the loan that you have applied for.
2. Applying for new debts like a car loan, opening a new credit line or getting a new credit card. Taking a new loan can affect your qualification for the loan, as a lot depends on the number of debts you have. Before closing, the lender checks, if you have opened any new debt. If yes, the terms of the loan could be changed and the closing could be delayed.
4. Avoid making transfers within the bank accounts as it might give the lender a chance to think of some unusual activity ending you to provide the additional documents.
5. Doing any credit checks while in the process of getting the mortgage loan or a refinance. This may lead to a lower credit score. A lender may do a credit check on your score before closing and if there is a considerable drop in the score the loan terms might change or be denied.
6. Changing a job or laying off. Avoid changing a job or a layoff because this could determine your ability to make payment. Usually, lenders would require 2 years of work history. And any sudden change in the job might lead to the change in the original loan term to be denied.
7. Don’t make any major purchases. Make sure you are having money in your account as this would help cover your reserves.
8. Avoid getting a ‘nonsufficient funds’ remark on any of your accounts as it could affect your credit score and lender could see this as the inability to make payments.
Your loan officer and the real estate agent are the right people to guide you to the do’s and don’ts while you are in the process of getting a mortgage loan or refinancing. Making the right financial decisions with the right set of people would always benefit you in the long run.
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