When buying a home or refinancing a loan, we are here to make sure you make it to the finish line smoothly and successfully. A part of that is helping our clients navigate potential speed bumps that may occur throughout the process. Here are the most common items that cause issues during the home loan process or delay it.
Please read through these do's and don'ts and fully understand them to avoid any potential issues. There may be exceptions, so if you would like help planning our home loan consultants would be happy to speak with you.
Do have all needed down payment or closing funds ready in one account two months to two full statements prior to the transaction. Lenders require most recent two months of bank statements to show that personal money is ready to use for the transaction. If there are a lot of transfers and movement of money shown on these two months of statements it may cause delays and extra documentation with explanation needed. Any unsourced funds or cash deposits will generally be disallowed.
Do make sure that the water heater is double strapped, carbon monoxide detectors are installed, and smoke detectors are installed in the property prior to a refinance or purchase. This is a safety law and the appraiser will specifically check for this. If either of these are not completed prior to the appraisal it may cause delays in the mortgage transaction.
Do make sure any large repairs or home improvement projects are fully completed prior to an appraisal. If there are any open walls or construction going on, an appraiser may deem the home unsafe and require that the work is completed. A clear appraisal is required to obtain a home loan.
Do include all pages of all documents when submitting personal documentation for your mortgage transaction. Very often, pages are skipped over if they are blank but interestingly enough, they are still required. As a rule of thumb, include all pages for all documentation unless your loan officer tells you otherwise.
Do have three or more pieces of credit associated with your credit report to establish history. Lenders like to see past history showing the ability to manage various type of credit accounts – this builds confidence in the ability to manage credit and a future home loan. It is recommended to have at least three different credit accounts with more than six months of history.
Do prepare any gift funds prior to applying for a home loan. Some loan programs allow for a gift as the down payment. If you believe a gift is possible, make sure to begin the conversation early and know who in your family it is coming from and for how much. This will help avoid delays during your transaction.
Don’t quit your job or change jobs if you are planning on buying a home soon or refinancing. If you do need to change a job, speak to your Loan Officer regarding the best way to document this since a new employment letter/contract may be accepted. Lenders require two years of job history in the same line for work. If you change your job to a different type of work, it may disqualify you from a loan. In addition, if you change from being employed to being self-employed, even if it is in the same line of work, it may disqualify you from a home loan. Employment is constantly verified throughout the loan process and prior to loan funding.
Don’t plan on leaving the country for an extended period of time during your home loan transaction. Going out of the country during the home loan process often means delayed response and being unavailable. It is important to communicate with your loan officer about any upcoming vacations and travels plans. At West Coast Mortgage Group we rely on communication and the latest technology to make your transaction simple and moving forward quickly.
Don’t add any additional debt through loans or new credit cards prior to getting a home loan or during your transaction. Any extra debt may cause qualification problems when obtaining a mortgage. Inquiries and new debt is monitored during the transaction until loan funding. If new debt is necessary, make sure to consult with a loan officer to develop the proper plan and tracking process.
Don’t close any credit card or loan accounts thinking that it will help prepare for a new mortgage. Often times closing a credit card account or paying off a collection account will actually have a negative impact on credit scores. A portion of the credit score is determined by average length of credit history between all accounts. Closing a account may bring town the average credit history and closing a collections account will trigger it active resulting in a recent negative against the credit score.
Don’t wire any funds to escrow from a bank account that was not verified from your lender. When getting a home loan, your lender will verify all bank accounts that will be used for the transaction and where any funds to close the transaction will come from. If you use a bank account or investment account not verified from the lender or loan officer, it may cause delays or the transaction not to close altogether.
Being proactive and over communicating is how to achieve a smooth and successful home loan transaction. There are a lot of moving parts and it is our job to help you get through without any delays or stressful situations. With over 15 years of home loan experience, West Coast Mortgage Group has mastered the art of helping clients through the loan process. We are here to answer any questions you may have and our loan officers are here to assist you with your home purchase or mortgage planning. Call us at any time for a free live consultation or schedule a meeting and we would be happy to