Congratulations! You have found the home of your dreams! You have all of your documentations in order! You are ready to move in! All you have to do is close on your mortgage! But wait, did something go wrong that could potentially prolong your loan closing? Was it something you did? Was it something you could have prevented?
When something goes wrong and there is a delay in the close date it can be very disappointing and frustrating. Unfortunately, we see this happen all too often when home buyers create delays on their own loans. Here are some tips that should be followed during the process to make sure you cause no closing delays.
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Be accessible and keep in touch with your loan officer
Stay in touch! Do not go out of town and do not change your phone number. Make sure you are available to all parties involved in your closing. When underwriters or title companies need documents and information they need them now! So stay connected, check your email and listen to your voice messages. If information is not given in a timely fashion your closing date won’t be either.
Look for incorrect information on your mortgage documents
Incorrect, misspelled or missing information is a huge problem during the closing process that could delay it. It is important to check over all documents and information prior to closing. Correct all information as soon as you notice it is not correct. Finding out information is not as it should be at closing could delay the process for days.
So, stay connected with your resources and sort out all of the little things as they come – don’t wait until the end!
Things to double-check on your mortgage paperwork include: loan amounts, down payment amounts, interest rates, name spelling, social security numbers, previous addresses, employer information etc.
Do not change jobs, become “self employed” or quit your job
Doing this is a sure way to prolong the process of purchasing a home. Underwriters require you to provide a month’s worth of paystubs during the process of buying a house. Therefore, if you change your employment and/or income you will need to provide another month’s worth of paystubs which could lead closing to be pushed back more than six weeks.
If you become self employed, commission based or a contract employee that gets paid by 1099, you may need a 2 year history to prove your income. Changing to self employment will surely delay your loan closing.
Stay with your current employment and income throughout the entire process of purchasing your home.
Managing your Bank Accounts wisely
Do not do anything that could dramatically change what you have in your savings and checking accounts including: transferring large amounts of making large deposits into your bank accounts or making large purchases.
Just because you have to money in your account doesn’t mean you can afford to spend it. If your underwriting approval is based on your current statement balance, spending money by making large purchases could delay your loan closing.
How much you have saved is a big deal to lenders. It tells them that you have enough for a down payment and that you will be able to pay your monthly mortgage payments. Changing the assets in your savings and checking accounts could change their minds about you and your financial situation.
When large amounts of money are transferred or deposited a red flag goes up that is often seen by lenders. This leads them to wonder if you have recently taken out an additional loan (or cosigned a loan) that they are unaware of – is your debt larger than what they thought?
If you are getting a gift for your down payment or closing costs, be sure to speak with your mortgage loan officer about the process that needs to be followed to use these funds. You will need to fully document the source of the funds and provide a letter stating that no repayment is required.
Try your hardest to keep your bank account relatively the same throughout the process and speak with your loan officer before you make adjustments.
Do not jeopardize your credit score
Keep your credit score the same as it was when you were approved for the mortgage. If it changes it could change your approval status and your eligibility for the mortgage.
Do not take out more debt during this process!
So, try your hardest to keep your credit card balance(s) at a minimum – don’t max them out. Don’t take out addition loans or cosign loans. Don’t take out new credit cards and do not close old ones. And of course, pay your bills on time.
Most Importantly – DO NOT GIVE UP!
There are many hills (some feel like mountains) to climb and many bumps avoid during the closing process. It is stressful and sometimes frightening but don’t get scared! Keep chugging along! If you are unsure of what is going on ASK! Your loan officer will gladly explain exactly what you need to do to have a smooth closing.
There is light at the end of the tunnel – becoming a homeowner is part of the american dream!