(This article is the second of a series on the home loan approval process. To read the first one, click here).
Communication
And that’s it. I can’t promise you that if you follow all these tips that you will get your mortgage, but there’s no question that if you do, you are far likelier to get a positive outcome, and a quieter process with few or no bumps.
Good luck, and I’ll be back soon!
The main reason why homebuying gets derailed is that the mortgage is denied and, at
times, that happens after the loan was preapproved. Specific factors can cause the initial evaluation to pass, but not the second, and today I’ll go over them briefly.
Changing jobs
Like I explained last week, when you change jobs you undergo a probation period; that is considered a huge risk when it comes to evaluating you for a long-term debt. If you’re in the process of buying a home when you land your dream job, keep in mind it’s very likely to cost you the mortgage. Sad, but true.
New debts
When I gave tips on what you should do before applying for a loan, I mentioned that you should make a budget that includes how much you will need/expect to spend on furniture, appliances, and lighting. The reason I said this is that once their loan is preapproved, there are peeps who decide to hit the furniture store to take advantage of those ‘buy now, pay nothing for 12 months’ offers, or who plan to use that 0-balance credit card they were holding for this.
Wait until after you buy the house. The preapproval was granted using a debt ratio analysis;
if you acquire new debts during the process of a more detailed examination, the debt ratio will change and it will not be in your favor. Patience!
This is very important: Late and non-payments
At the end of each month, all businesses that report to credit bureaus send out their data for that month’s activity on your accounts. If you forgot to pay one or several bills, this will appear on your credit report and it will even affect your credit right away. Remember to pay on time!
Large funds transfers
I already mentioned that it’s perfectly acceptable to use qualified withdrawals from some investments and accounts to pay for your down payment and/or closing costs; some family member cash gifts are also fine. But whenever you move money to/from your accounts in large numbers, you must be able to justify those movements to the lender, or you run the risk of losing the loan. If you’re making these transfers after being preapproved, keeping records of every movement, where and how each originated goes a long way to helping you; it would be even better if you were able to inform your loan officer before you make the transfers.
The appraisal
This possibility is beyond your control, but keep in mind that at the time of appraisal (the
process of ascertaining the home’s value so that it matches -or is above- what the buyer is asking for it) you may find out that the appraiser finds the buyer’s price too high, or he/she finds a condition that may thwart the type of loan you were approved to get; this is especially possible when asking for state help from agencies like the FHA, or when there are large construction projects pending either in the home, the home’s complex, or the area.
This doesn’t mean you won’t get a loan, but it will change the type of loan you can get, or you might get special clauses.
 |
| A job offer during the home loan process can become your enemy. |
Changing jobs
Like I explained last week, when you change jobs you undergo a probation period; that is considered a huge risk when it comes to evaluating you for a long-term debt. If you’re in the process of buying a home when you land your dream job, keep in mind it’s very likely to cost you the mortgage. Sad, but true.
New debts
When I gave tips on what you should do before applying for a loan, I mentioned that you should make a budget that includes how much you will need/expect to spend on furniture, appliances, and lighting. The reason I said this is that once their loan is preapproved, there are peeps who decide to hit the furniture store to take advantage of those ‘buy now, pay nothing for 12 months’ offers, or who plan to use that 0-balance credit card they were holding for this.
Wait until after you buy the house. The preapproval was granted using a debt ratio analysis;
 |
| Used furniture stores can hide some wonderful pieces. |
This is very important: Late and non-payments
At the end of each month, all businesses that report to credit bureaus send out their data for that month’s activity on your accounts. If you forgot to pay one or several bills, this will appear on your credit report and it will even affect your credit right away. Remember to pay on time!
Large funds transfers
 |
| You'll need to explain it. |
I already mentioned that it’s perfectly acceptable to use qualified withdrawals from some investments and accounts to pay for your down payment and/or closing costs; some family member cash gifts are also fine. But whenever you move money to/from your accounts in large numbers, you must be able to justify those movements to the lender, or you run the risk of losing the loan. If you’re making these transfers after being preapproved, keeping records of every movement, where and how each originated goes a long way to helping you; it would be even better if you were able to inform your loan officer before you make the transfers.
The appraisal
This possibility is beyond your control, but keep in mind that at the time of appraisal (the
This doesn’t mean you won’t get a loan, but it will change the type of loan you can get, or you might get special clauses.
Communication
If you avoid all the situations I’ve described today, it’s rather likely that your loan will get approved in the end. My last bit of advice is that you keep open the lines of communication with your loan officer and real estate agent. If you have questions, try to now swamp your
loan officer with individuals but instead, jot down various questions and contact him/her when you have several. Also, if they ask you urgently for a document or piece of information, try to provide the answer as soon as possible: if there will be a delay in providing it, explain the reason why.
And that’s it. I can’t promise you that if you follow all these tips that you will get your mortgage, but there’s no question that if you do, you are far likelier to get a positive outcome, and a quieter process with few or no bumps.
Good luck, and I’ll be back soon!
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