With the tightening of credit underwriting standards by lenders, it makes sense to know what NOT to do to make sure your mortgage application process is uneventful.
It used to be unusual, but today it’s becoming more commonplace for lenders to pull a second credit report prior to funding, especially if there is a long time between your loan approval and the funding date. What does this mean for you? It means that what you do between loan approval and the loan funding can either assure your closing goes through without a hitch or have costly consequences.
With these new lending rules in place makes it a pretty smart move to follow these tips to avoid Mortgage Sabotage:
- Don’t move money around—especially large amounts. Be prepared to have a meticulous paper trail if you do.
- Don’t buy a new car or lease a more expensive one and don’t go out and put money down on new furniture, new TV or other large ticket item… Wait for a purchase or upgrade until after you have closed on your house.
- Don’t change or quit your job—Discuss this with your loan officer FIRST, even if the job is higher paying, so you don’t jeopardize your loan.
- Credit Cards/New Accounts—Don’t apply for a new card, even if you won’t use it, and don’t open any new accounts before funding of the loan. Don’t close out any of your credit accounts even if you haven’t used them in a long time, either.
- Gifts—Even if you need it to help with the down payment, make sure to have all documentation including copies of the check, deposit slip and proof the funds are available.
- Make sure to pay your bills—even if you’re disputing them. You don’t want your credit report to reflect delinquencies or collections.
- Keep your Financial Papers handy—Tax returns, 1099’s, W-2s, HUD-1’s, PAY STUBS, bank statements all need to be kept in a safe place that you can easily access if needed.
- Review your credit! It’s yours to protect.
