Here are Mortgage DOs and DON’Ts to follow during your loan process.
Mortgage DOs
Keep All Records in Good Order.
- Availability: Keep your financial records close at hand in case updates are requested.
- Income: Be aware that underwriters typically verify your income and tax documents through your employer(s), CPA, and/or IRS tax transcripts. Hold onto new paystubs as received.
- Assets: Continue saving incoming account statements. Keep all numbered pages of each statement. Ex. 8 of 8.
- Gifts: If you’re receiving any gift money from relatives, they’ll need to sign a gift letter (we’ll provide), and documentation of the source and transfer of the gift funds may be required.
- Current Residence: If you’re renting, continue paying your rent on time and save proof of payment. If you’re selling your current residence, be prepared to show your Closing Disclosure or other applicable settlement statement. If you’ll be renting your home, you may need to show sufficient equity, a lease, and receipt of the first month’s rent and security deposit.
Keep your credit shining. Continue making payments on time. Your credit report may be pulled again, and any negative change to your score could cause you to lose your approval and your home.
Understand that things have changed. Underwriters require more documentation than in the past. Even if requests seem silly, intrusive, or unnecessary, please remember that if they didn’t need it, they wouldn’t ask.
Mortgage DON’Ts
Apply for new credit. Changes in credit can cause delays, change the terms of your financing or even prevent closing. If you must open a new account (or even borrow against retirement funds), please consult with us first.
Change jobs during the process. Probationary periods, career or even status changes (such as from a salaried to a commissioned position, leave of absence, or new bonus structure) can be subject to very strict rules.
Make undocumented deposits. Large or unusual deposits may need to be documented if the funds are being used for the transaction. Keep records showing the source of funds and avoid depositing cash without clear documentation.
Wait to liquidate funds from stock or retirement accounts. If you need to sell investments, do it now and document the transaction. Don’t take the risk that the market could move against you, leaving you short of funds to close.
Ever be afraid to ask questions. If you’re uncertain about what you need or what you should do, I’m here to help you through the process, even long before you intend to buy.
Reach out today with any questions, big or small. We’re happy to help every step of the way.
FAQs: Mortgage DOs and DON’Ts
During the mortgage process, keep all your financial records in good order and readily available. Underwriters may request updates on your income and tax documents, so hold onto new pay stubs as you receive them. Continue saving incoming account statements and keep all numbered pages. If you receive gift money from relatives, a gift letter and documentation of the source and transfer of the funds may be required.
It is crucial to keep your credit shining throughout the loan process. Continue making all payments on time, as your credit report might be pulled again before closing. Any negative changes to your credit score could jeopardize your loan approval and your ability to purchase the home.
Avoid applying for new credit, as changes in your credit can delay the process, change the terms of your financing, or even prevent closing. Also, refrain from changing jobs without consulting your lender. Avoid undocumented deposits, and keep records showing the source of large or unusual deposits.
If you need to sell investments to fund your home purchase, do it early in the mortgage process and document the transactions. This prevents the risk of market fluctuations working against you, which could leave you short of funds needed to close. It’s better to ensure that the necessary funds are readily available when required.
