You Have More Control Than You Think
The most important thing a buyer CAN control during the house hunting and buying process is their actions and behavior during the mortgage application, thereby helping to minimize some of the anxiety that roughly 47% of ALL borrowers report to have. So... you are not alone. Let's review the list...
Get Pre-Approved Before You Start Searching
First and foremost, get yourself fully pre-approved before doing any home searching. In addition to your loan application, your mortgage loan originator and loan processor are going to ask you for a lot of documentation such as tax documents, paystubs and bank statements.
Do not take photos of these documents and then text to your lending team. It becomes difficult to put the documents in proper order with so many pages. On top of that, the photographed documents are usually illegible. Rather, take the time to scan and email the documents to your lender's secure site using a smart phone's app (which has a scan feature), a scanner (if one is available to you) at home or an office supply store (normally for a charge), or if your loan officer is local... drop the copies by in person.
- Provide ALL pages of bank statements, even if it's a blank page.
- Provide ALL pages and schedules of your tax returns. Lenders require this.
Protect and Manage Your Credit Carefully
If you have your credit report locked down (sometimes called a credit or security freeze), be sure to unlock ALL three bureaus (Experian, Equifax and Transunion) before your lender attempts to order your credit report. Remember to lock it back up once your lender orders the credit reports.
If you have any disputed accounts on your credit report, remove them before your credit is run. Disputes can skew the credit scores. The underwriter will ask for a new credit report with the disputes removed before granting what's called a credit approval.
Do not go out and take on new debt such as buying furniture or a car during the home loan process. Be sure to continue to pay your bills on time. Lenders monitor credit ALL the way up to the time of the loan funding.
Move Fast on Disclosures, Inspections, and Insurance
Sign and date your lender disclosures as soon as possible. Documents are typically sent via email. Your lender can't order your appraisal until you sign your "intent to proceed."
Have the home inspected as soon as possible after the sales contract is executed. You want to do this before spending money on the appraisal. In the event you decide not to buy that home based on the home inspector's opinion, at least you've saved yourself the cost of an appraisal.
Decide on your homeowners' insurance agent — which will include the policy and premium amount — as early as possible once you identify the home. Your lender is going to need the insurance company and premium to plug into your loan package.
Keep Your Finances Stable and Transparent
Do your best to avoid moving money around to different accounts during escrow and two months before going into escrow. Your loan processor must track the paper trail of any large deposits, typically more than a paycheck, and if present, will create additional work for you too. Lenders always ask for the most recent two months of bank statements, and they always ask for an explanation if they see a large deposit.
Never bring funds into escrow from a previously undisclosed account. The loan will stop in its tracks until the "mystery money" is cleared up and properly documented. Using cash on hand (aka "mattress money") to contribute to your down payment and closing costs is a big no-no for most every loan except FHA in certain scrutinized situations. If you have a substantial amount of cash on hand that you intend to use, put it in your bank account more than two months ahead of home shopping.
Disclose all the property you own, even if it's just raw land. Your lender has access to some sophisticated tracking tools, which can find every loan. The lender is largely looking for undisclosed debts and payments.
Stay Available, Communicative, and Cooperative
Do your best to avoid changing jobs during the escrow period. The lender will call and verify employment right before the loan funds. If you must change jobs before your loan funds, tell your lender as soon as possible so that they can verify the new job and income. A lot of lenders require at least one paystub on the new job before funding a mortgage. Check with your lender and calendar accordingly.
Try to avoid going out of town or on vacation during the loan process, especially if you won't have internet access or potential items needed by the lender. Leaving town could mean you're less able to access documents or conditions that might be requested by the underwriter. And you must sign loan documents in front of a notary at closing. It's always more difficult to arrange signings when you are gone. It could even delay your closing.
Be cooperative and timely in responding to all lender requests. For example, there might be recent credit inquiries in your credit report. Your loan processor is required to have you explain those and whether you took out credit from the creditor inquiry list.
If you are not understanding something in the process, be sure to ask your mortgage loan originator to explain it. On the flip side, if your financial situation is complicated and non-obvious, be sure to take the time to explain it to your mortgage loan originator. The better you are understood, the easier your loan will get done.
