There are a few things you just shouldn’t do while you’re in the middle of the loan process. Avoid these and the home financing process will go smoothly for everybody involved.
Some loan applicants try to withhold information, feeling like it could harm their loan, but the person they’re talking to is their loan officer! You really need to think of your loan officer like your lawyer, not the judge or the jury. They’re on your side. During the loan process, most financial facts are going to be found out eventually. It would be far better to know them up front, instead of letting your lender be surprised by them and giving them a mess to clean up.
The things that people seem most worried about telling us are job changes, a loan to their brother, or that they’ve been out car shopping. But if they explain everything and tell their loan officer upfront, that loan officer can help structure a deal. It doesn’t have to be an issue. Problems arise when those things are found out three weeks into the process. Then we have to stop the loan process to go back and fix those things that could have been handled on day one.
The best thing you can do is over-communicate with your loan officer. Make sure that loan officer knows everything that’s going on, and let him or her figure out the best way to handle those things.
Make financial changes
You want to avoid running up credit cards or moving money between accounts. Although we can find the paper trail for that money, it still creates headaches for you and for us.
We have had clients start working fewer hours, or try to work more hours to get overtime pay. There are certain loan programs that may disqualify applicants for working all that overtime.
This goes back to communicating with your loan officer so they can advise you on the best course of action. If you feel like you want or need to make changes to do with your work or your financial life, tell your loan officer!
Drag your feet
Most of the rules and guidelines we have to follow are not our rules. They are there so that we can sell your loan down the road to agencies like Fannie Mae, Freddie Mac, or FHA. It’s their rules and their guidelines. We’ve had clients drag their feet thinking, “Maybe they’ll quit asking me for this thing.” But all that does is prevent us from getting the loan into underwriting sooner rather than later. It can create closing delays.
Some clients wait until the last minute to get us documents. They don’t realize there’s a sequence of events that has to take place after that. I’ve had someone ask me if they can get their pay stub to us on a Thursday when they’re trying to close on Friday. They don’t know all the different people that have to touch their loan in order to get it approved. It can be a several-day process.
Dragging your feet is probably the biggest hold up in the mortgage process.
Buy furnishings before you close
It’s best not to buy things for a house you don’t own yet. If you want to finance things like furniture and appliances, wait till after closing. I get this question a lot: “You guys have already seen my credit. I’m closing tomorrow. Why can’t I go finance that stuff on my way there? You’ll never know about it.”
But there’s a certain unpredictability about closing. Every now and then something happens. We’ve run into terrible events such as the death of the seller. The house was still sold after some changes to the paperwork, but closing did get moved by a week. Another time there was a really bad storm. The closing attorney had to close down the office and move closing to the following week.
In both of these cases, the client’s credit had to be refreshed. We had to review their credit one more time before closing to ensure there were no major changes. If they had financed things like furniture or appliances, or made any other changes, that could have been an issue.
So we just say, “Don’t buy anything for that house until you own it. Go shop for it and get it all picked out. But don’t let anyone have any of your credit in the meantime. Wait till you’ve signed all the paperwork.”
If you have questions about what to do during the loan process, or anything else to do with home financing, hit us up. You can call 205–986–4220, connect with us on social media, or ping our website. We are happy to help you in any way we can.
— Ben Chenault,
Certified Mortgage Planner
MortgageBanc / Fairway Nmls# 2289
Copyright©2019 Fairway Independent Mortgage Corporation doing business as MortgageBanc. NMLS#2289.4750 S. Biltmore Lane, Madison, WI 53718, 1–866–912–4800. All rights reserved. This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Equal Housing Lender. Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, License No 41DBO-78367. Licensed by the Department of Business Oversight under the California Finance Lenders Law, NMLS #2289. Loans made or arranged pursuant to a California Residential Mortgage Lending Act License. Georgia Residential Mortgage Licensee #21158. Licensed Nevada Mortgage Lender.