Hey, there! Hope all is well. Let’s get to it. I’ll tell you a story about a Borrower. Let’s call this Borrower Elbert (purely fictional, okay?). We were almost to the CLOSING point on an investment rate and term refinance. This loan had already taken a few months. You read right. Months! Why? He refused to respond to our processing team’s calls. In fact, he would hang up on them, later stating that he thought they were telemarketers.
Elbert turned in one condition every few weeks. Imagine my delight! Oh, but he could call and demand to know when he would close, though! So, one day Elbert decided he really did need the lower rate he asked for. It was a miracle! He started cooperating. We got him all the way to the closing point. The Underwriter just needed to verify everything before closing and then, BAM---this bright individual purchases a brand-new luxury car and overhauls something huge in his personal home. What the…? Was he serious? These two, new loans, with resulting monthly payments of several hundred dollars each, suddenly made his debt ratio shoot to 79%. Conventional debt ratio can go to 50% max (in some circumstances) but most programs like to see 43% max. As a result, unless he placed a co-signer onto the loan for income (of course he didn’t have one) this ready-to-close loan was suddenly, yep, you guessed it, DEAD. Money and time LOST for everyone!
So today, Ladies and Gents, I’m going to tell you 5 things you should never, ever do once you have entered the sacred loan process:
#1 DO NOT MAKE CREDIT CARD PURCHASES
You are to act like a child in a supermarket. Don’t touch anything. Don’t attempt to buy anything. Don’t even look at anything, if it is to be charged onto your credit cards. Unless you are making card payments, act like they don’t exist. Credit charges report fast. They will increase your monthly payment and decrease your available credit = no good. Higher monthly payments equal a higher debt ratio. New purchases for normal items need to be cash or Debit /ATM card only, or on someone else’s credit cards (that don’t list you as an AUTHORIZED USER, because that’s the same darned thing as YOU using it) until you are FUNDED. As a side note, if you also dabble in investment properties, DO NOT purchase any other property for investment, not even in cash. Real estate properties have taxes and insurance to boot. Those new expenses will have to factor into your monthly debt ratio.
#2 DO NOT PAY YOUR BILLS LATE
Do NOT pay your bills late. PAY ALL YOUR BILLS ON TIME, OMG, especially your rent or mortgage. Any late payments will affect your loan. A 1x30 mortgage late can completely cost you the loan you were approved for. Keep all accounts paid on time, including car payments, all installment loans, utility bills, cell phone bills, and even child support accounts.
#3 DO NOT QUIT/ CHANGE YOUR JOB
Do NOT quit/change your job. You cannot decide your job and your boss both suck and NOW is the time to leave it all in the dust. NOPE! Do NOT change jobs in the middle of your loan process. Two years of job history and income is KEY. Any new changes can have a negative impact on the income already calculated and approved for you. We will need you to pull up a chair, have a Coke and a smile and sit DOWN somewhere until your loan is over.
#4 DO NOT APPLY FOR NEW CREDIT, ANYWHERE
DO NOT apply for new credit, anywhere. I don’t care if that new offer says you are pre-approved by the President of the United States, you STILL cannot DO IT. I am sorry, but all of this will need to wait until you close your current loan. Your debt ratio will be affected and could mean the difference between you ending up with a closed loan, or a denial.
#5 DO NOT MAKE LARGE DEPOSITS/ WITHDRAWALS
Do NOT make large deposits / withdrawals. The most recent bank statements are an important part of your loan qualification process. Large deposits or large withdrawals = possible red flags. If you plan on receiving any part of your down payment as a gift, please mention that upfront, so your Loan Officer can walk you through all of the required steps for gift funds.
The goal is to get you closed. If you have questions on additional do’s and don’ts when your mortgage application is in process, contact us today!
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