Avoid major mistakes! Things we normally take for granted can cause major upsets and delays during the loan process. Some may even impact your ability to qualify for a loan.
Pre-approval is based upon specific credit and financial information provided to us. If your circumstances change in significant ways, your approval is subject to change too.
To avoid disappointment, seek the advice of your loan officer, and avoid making the following mistakes.
Changing jobs before or during the loan process is not typically advised. New employment and income will need to be verified, paystubs must be obtained, and this can cause potential delays. For those whose income is significantly based on commissions and bonuses, changing employers creates major uncertainty and may impact your ability to qualify for a loan.
Do not change banks or move your money around without first discussing it with your loan officer. It is essential that we can verify the source of funds for your down payment and closing costs. Underwriters closely examine deposits and withdrawals from your asset accounts: checking, savings, money market funds, mutual funds, stock statements, etc. Moving money or changing accounts can make it difficult to document your finances, making it necessary for you to provide even more documentation.
At least, not before consulting with your loan officer. Your debt-to-income ratio – that is, the amount of debt you have compared to the amount of money you earn – is a vital factor when obtaining a loan. Whereas a high credit score is a good thing, the lower your debt to income ratio the better. Major purchases, such as a car or large credit card balances, increase your debt to income ratio and can wreak havoc with the calculations we need to approve your loan.
Underwriters are incredibly adept at research and due diligence. If they find something you haven’t told us about – and that we could have prepared to address – your loan can go sideways in a hurry.