In this day and age of over regulation by the government, it is super critical that borrowers don't do silly things that may cause the loan process to, at best, be delayed, and at worst, having the loan denied. Below is some of the most common scenarios which occure that have caused chaos in getting a mortgage.
- Quit your job or change jobs:
Lenders will verify your employment up to 3x before the loan is closed, and that also includes the day we fund and record the loan. Ensure that you keep your loan officer updated on any employment changes during the loan process. Switching employment does not necessarily mean the loan will be denied, but it definately will cause delays.
- Un-Documented or random deposits into checking or savings accounts:
Because purchasing a home or refinancing a home is one of the #1 ways to launder drug/terrorist money, the government makes lenders research all deposits. As lenders we have to Source and Season all money. Sourcing means we need to know where that money came from, and Seasoning is how long it has been in that account. This includes but it not limited to:
- Money in your Sock Drawer.
- Example of this is stored money in a safe, i.e. emergency funds.
- Money from Selling anything on eBay, Craigslist, garage sale, or private parties.
- Example of this would be selling an auto on Craiglist without the property documentation.
- Money from roommate, friends, or family memebers, gifts.
- Example of this is getting money from parents to help you with downpayment, without the proper documentation. The link here will explain the proper way to utilize "Gift" funds: Link Here
- Money from tips or "under the table" from your employer or "self employment".
- Transferring money from one account to another account.
- Example of this would be transferring money from a business account to a personal account, without giving the loan officer a copy of the business account statements.
- It is recommendeded that a borrower doesn't transfer any money from one account to another during the loan process.
- Purchasing ANYTHING on a existing credit card:
Adding to existing credit lines can cause credit scores to fluctuate, and if a new charge on an existing credit card casues the balance to go over a certain threshold, it can cause a borrower's FICO scores to drop.
- Applying for ANY type of new credit or loans, including short term payday loans:
New credit pulls will be flagged and the lender will be notified, almost all lenders will put a flag on a borrowers credit report, and if new credit is pulled, the underwriter and loan officer is informed.
- Also DO NOT Close any accounts, closing accounts can dramatically affect a person's FICO scores.
- Being Late or Not paying on an existing bill:
This would include, but not limited to: Credit cards, installment loans, utility bills, student loans, library books, parking tickets, and most important, your current mortgage, ensure that ALL bills are paid on time, each month during the loan process.
- Getting married or divorced without telling the loan officer:
Yep, it has happened, one wild druken weekend, a couple runs off to Vegas and gets hitched. But due to Idaho, and many other states, being a community property state, it is critical that loan documents are completed properly with the right material status.
When in doubt, ALWAYS call your loan officer with questions, keeping the loan officer informed of all financial transactions in your life, during the loan process, is critical to ensure a smooth and successful closing.