For all the talk of how tough it is to be “mortgage approved”, the basics of mortgages haven’t changed. Mortgage approvals are still the 3-legged stool of income, equity and credit.
Sometimes, though, it’s not getting approved that’s hard — it’s staying approved.
You have to watch out for landmines.
Mortgage approvals take time. In a typical home loan market, it’s about 3 weeks from start-to-finish.
Approvals can take longer, however, depending on market conditions. For example, if rates are low and there’s a refi boom on-going, a refinance can take 6 weeks to close. Banks don’t have capacity to do work much faster.
Or, if you’re buying a home and it’s a short sale or foreclosure, expect delays there, too. With REO, it can take up to 6 months to get to the closing table.
Thing is, during that “extra time” — 3 weeks, 3 months or longer — a lot can go wrong, and when things go wrong, your loan goes bad. For example, if lose your job, become ill, or see your home damaged by storms, you may lose your mortgage approval — even if you were previously cleared-to-close.
Unfortunately, these are all events that are beyond your control. You can’t control sickness any more than you can control Mother Nature. But you can control yourself during those extra few weeks.
Good behavior matters in mortgage.
Bad Mortgage Behavior, Defined
Keeping “good behavior” in mind, here are 8 things you should absolutely not do between your date of application and your date of funding. I’ve been doing this long enough that I can say with certainty: Ignore these rules at your own peril.
- Don’t buy a new car or trade-up to a bigger lease
- Don’t quit your job to change industries or start a new company
- Don’t switch from a salaried job to a heavily-commissioned job
- Don’t transfer large sums of money between bank accounts
- Don’t forget to pay your bills — even the ones in dispute
- Don’t open new credit cards — even if you’re getting 20% off
- Don’t accept a cash gift without filing the proper “gift” paperwork
- Don’t make random, undocumented deposits into your bank account
Now, you may find it 100% impractical to have to follow these rules to the letter. I know that.
For example, if your car lease is expiring, you have to do what you have to do. Renew the lease. But before doing it, you should check with your loan officer to see if renting a car in the short-term, instead, would be a more mortgage-friendly solution instead.
The same goes for accepting cash gifts from parents. There’s a right way and a wrong way to accept a cash gift from family and if you do it the “wrong way”, your gift may be prohibited from use as part of your down payment funds.
There are a bevy of “gotchas” in Mortgageland and you can’t expect to know them all. These 8 rules, however, are a good start.
If you are considering a mortgage on a real estate in Truckee or North Lake Tahoe, you should call:
Executive Mortgage Planner
1687 Eureka Rd Ste 100
Roseville CA 95661
MLO 275575/DRE 01181311