10 Boneheaded Home Loan Moves… You Cannot Make Before You Close
Getting a loan can be a long and frustrating process even when you don’t have a complex situation. While there are a lot of hoops to jump through, people often cause their own headaches. Here is a list of the most common self-inflicted wounds to avoid before and during your loan process. You simply cannot do any of these without FIRST contacting your lender:
1.DO NOT: Have someone pull your credit for any reason.
You must explain and document any credit inquiries and they can lower your score.
2. DO NOT: Open or co-sign for any new credit accounts including store cards.
You have to document any new accounts and include them in your debt calculations.
3. DO NOT: Increase the balance on any loans or credit accounts.
You may have to include higher payments and they can really lower your credit scores.
4. DO NOT: Change your employer or your job.
Depending on your situation, you may not be able to include any of your new income.
5. DO NOT: Change your compensation from base to commission or W-2 to 1099.
Even changes to how you are paid can exclude your income from the loan calculations.
6. DO NOT: Make any major purchases like a car, appliance, or furniture.
Even if you don’t use financing, you still need the required cash reserves after closing.
7. DO NOT: Deposit, withdraw, or transfer money into, out of, or between accounts.
You will have to document and verify all account deposits including account holders.
8. DO NOT: Sign any contracts or leases.
You have to count the payment of any new lease or property even if you don’t own it yet.
9. DO NOT: Begin any home renovation or repairs.
Repairs always take longer than you think and they usually must be done for a loan.
10. DO NOT: Go on vacation or a work trip.
In many cases, you can close out of town or use a Power of Attorney, but not all the time.
New lending rules require your lender monitor your credit activity. They even have to re-verify your income right before closing. Additionally, they may have to update other documentation at any time up to the day your loan funds. So, even after your loan is approved, you are not done.
I realize you can’t control all of these things. It is also unrealistic for you to not deposit and move money or go out of town for work. However, you must discuss these things with your lender in advance. If they could cause a problem with your loan, you need to find alternatives