We’re often asked by my clients what are the “top things buyers should not do during the loan process.” Linda Hulberg at Western Bancorp put together this article with some of the most common mistakes made. Thanks, Linda, for those great words of acvice!
Here’s what Linda has to say:
Don’t go shopping for a car. If you must visit the showroom, at least don’t give anyone your social security number. This enables the dealer to check your credit. Each credit inquiry lowers your credit score even if you do not buy a car. Lenders are increasingly using credit scores to assist in mortgage credit decisions and to price an individual’s loan. High credit scores are good. Low scores aren’t.
Don’t respond in the affirmative to “you are pre-approved for a credit card” mailings. A credit inquiry will result with the same impact as above.
Don’t incur ANY new debt. This increases your debt-to-income ratio, reducing the amount you can borrow.
Don’t file for divorce. This is not advice from Dear Abby. Once you file for divorce, most lenders will not make a mortgage loan until the final decree, setting forth settlement terms, is recorded.
Don’t move money designated for down payment from one account to another. If you do, keep a detailed paper trail. Lenders may request it.
Don’t fail to keep records of any stock liquidation for down payment. Same reasoning as above.
Don’t change the source of your down payment. If your loan application states down payment is from sale of stock, do not simply deliver a cashier’s check into escrow from your bank account. Any change in source of down payment may require the loan to be underwritten again.
Don’t leave town without telling your loan agent and leaving a contact number. You may be needed for a decision or to provide additional documentation. And of course you will need to be available to sign loan documents.
Don’t quit or change your job. Lenders typically call your employer just before the loan records to verify you’re still there. If your employer says you are no longer there, the lender will stop the loan from recording.
Don’t forget to make the payments on any of your present loans or credit cards. This is obvious, but once in a while a buyer forgets, putting the loan (and escrow close) in jeopardy.
Don’t fail to inform your loan agent of any changes to the transaction. Last minute changes such as holdbacks, seller credits or termite work can create havoc with closing dates.
All is not lost if a buyer does a “don’t.” We can minimize or eliminate permanent damage to the transaction, even though delays and stress can occur.