What to Do (And What Not to Do) When Getting a Mortgage
Avoid making these mistakes that can put your home loan at risk.
You’ve applied for a new home loan or have decided to refinance your existing mortgage. Congratulations are in order!
You’ve made a great choice, and much of the work is now done. You’ve researched loan options, talked through them with your licensed CrossCountry Mortgage loan officer, gathered the required documentation, and completed your application.
Now all you have to do is wait, right? Not quite.
During the CrossCountry Mortgage loan process, there are many factors that our loan processors and underwriters will review when considering you for a loan. Processors may request additional or updated documentation, and underwriters may need clarification on certain aspects of your finances. But that’s not all.
Beyond reviewing and requesting documentation on your financial history, we’ll also be paying attention to what you’re doing with your finances during this time. Even though the initial application is complete and our team has most (if not all) of the documentation required to review the loan, you shouldn’t go finance a new suite of living room furniture or buy a new car.
But why not? You’ll need to furnish that new house, right? And your new garage has plenty of space for another vehicle.
Because any use of credit will affect important aspects of your financial standing, such as your debt-to-income ratio and credit score. It’s essential that both remain consistent during the loan review process, otherwise the details of your loan could change. You may be required to provide a written explanation of your activity, or worse—your loan could be canceled.
So, how can you avoid putting put your loan at risk?
Here are the DOs:
- Complete your application thoroughly. Be sure to provide all of the required information and documentation.
- Respond to questions and requests promptly. Additional requirements (known as loan conditions) may need to be cleared to help underwriters approve your loan.
- Disclose all other loans and credit. Be transparent with your loan officer so your application will not get held up.
- Be accessible as your closing date approaches. Schedule time to review and sign documents and pay closing costs and down payment.
Here are the DON’Ts:
- Don’t make any major purchases on credit. Using your credit cards or opening new lines of credit to acquire cars, appliances, or furniture will alter your debt-to-income ratio, negatively affect your ability to make monthly mortgage payments, and harm your ability to qualify for a loan.
- Don’t move money around in your accounts. This type of activity may appear to be an attempt to hide debt or conceal large balances.
- Don’t use untraceable money. Using large amounts of untraceable cash can make it difficult to understand your spending habits and cash flow.
- Don’t make a career change. Staying at your current job until after your loan closes demonstrates income stability.
We’re just as excited as you are about your new home or mortgage refinance. That’s why we put together this list of things to do and not to do as you’re navigating the loan process. Not only will this information help you when your loan is being reviewed, but it can also be useful if you’re just getting ready to apply.
This list, of course, is for guidance purposes only. Sometimes life throws curve balls that we have no choice but to address. We understand. Don’t hesitate to contact us if one of those curve balls comes your way.
If you’re looking to buy or refinance and are unsure about one of these dos or don’ts, we’ll be happy to discuss your situation and answer any questions you might have. Start the conversation with your knowledgeable CrossCountry Mortgage loan officer today!
CrossCountry Mortgage, Inc. is an FHA Approved Lending Institution, and is not acting on behalf of or at the direction of HUD/FHA or the Federal government. All loans subject to underwriting approval. Certain restrictions apply. Certificate of Eligibility required for VA loans. CrossCountry Mortgage, Inc. is an FHA Approved Lending Institution, and is not acting on behalf of or at the direction of HUD/FHA or the Federal government. All loans subject to underwriting approval. Certain restrictions apply. Certificate of Eligibility required for VA loans. USDA Loans: Borrower income limited to 115% of median income for the area. Borrowers must have reasonable credit histories. 30-year loan term. Housing costs cannot exceed 29% of income; total debt payments cannot exceed 41% of income. Homes must meet state and HCFP building codes. Funding fee required. Available only in designated USDA rural areas.