The Top “Do’s and Don’ts” When Acquiring Your New Mortgage
Below is a quick guide to help you stay on track during your mortgage approval process.
1) DO get your money “liquid for closing”
Many folks fail to realize they need liquid funds at the closing table. This means it will need to be in a checking or savings account so a wire or a “certified check” can be obtained a day or two prior to the closing. Be proactive. Get the funds moved into your accounts weeks in advance. If you must transfer funds from a retirement, do not wait to start that process as it could take a week or two to complete.
2) DO tell your loan officer about upcoming vacations & schedule conflicts
Your Loan Officer will be in constant contact with you throughout the 3-5-week process of approving your mortgage. If you are unavailable, you could delay your final approval which could put you out of contract with your Purchase Agreement. If you have something already booked in the future where you can’t attend the closing in person, please let your Loan Officer know ASAP, so they can advise on alternative arrangements.
3) DO provide a HR contact for a verbal VOE
The Lender will CALL your current employer 3-5 days prior to closing to ensure that you are still working. This contact information can speed up the final approval process and help you not have to scramble at the end to find someone to assist. The last thing you want to do is hold up your closing because your employer can’t be reached. Teachers need to pay special attention to this if closing over the summer or on a holiday break when the administrative offices could be possibly be closed.
1) DON’T quit or change jobs
I do realize this sounds like a no-brainer but you would be surprised how often this occurs. The Lender will re-verify your employment 3-5 days prior to closing to ensure you are still gainfully employed. If you switch jobs during the process, it may delay the closing or your mortgage could potentially be declined. If you are currently salaried and you switch to “self-employed” after you were pre-approved, your loan will probably be declined.
2) DON’T open new credit accounts
Taking on new debt is never a good thing in the eyes of an underwriter. The Lender will do a “soft pull” of your credit during the approval process to see if you have inquired into taking on new debt which could affect your ability to repay the loan. Be on the lookout for your Loan Officer to ask you to write a letter of explanation for any new inquiries as well as provide supporting documentation on any new accounts that have been established.
3) DON’T change or open a new bank account
Verifying your “cash needed to close” is one of the most important aspects of your mortgage approval. The underwriter will closely look into all the details of the funds flowing in and out of your accounts. Be prepared to write letters of explanations for some of the activity. Switching bank accounts will make the process even harder for the Lender and could cause you a lot of headache and frustration as you attempt to show the money trail.
If you have any questions about starting the mortgage process and buying a new home in Michigan, please Call Us with questions.