Congratulations! You applied for your loan and maybe you finally found the house of your dreams. You made a bid, had it accepted by the seller, and went through the mortgage application process. It looks like you'll qualify. The closing is only weeks away, and you are feeling pretty good.
It's smooth sailing from here, right? Probably. However, more than one buyer has had the wind taken out of his sails at this point in a real estate transaction. If at all possible, steer clear of the following "NO-NOs" until AFTER you have gone to settlement.
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Do not take on new debt or apply for new credit cards. The temptation is strong. There are so many big purchases people potentially want to make in connection with a move: appliances, window treatments, furniture, etc.. When you add to this the fact that, today, everyone offers easy terms and no money down - well, why not just do it? Answer: because you will change what the industry calls your "back-end ratios" ( the relationship of your income to your debt). It could also lower your credit score.
· Do not be difficult to reach. The loan officer or processor may need to reach you for additional information or documents. Check your voice mails and emails often. Check your junk email file also. Communication is the key to a smooth closing.
· Do not quit your job, change jobs or take a leave of absence. If at all possible, try not to make a career move during the time between your mortgage application and the closing on the home you are purchasing. But, you ask, "What if it is a BETTER job, for MORE money, in a DIFFERENT field?" Still, try and wait until AFTER closing. One of the factors mortgage companies consider is length of present employment; they are partial to stability. At the very least, changing jobs initiates the need for more paperwork, and maybe a delay in closing.
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Do not stop paying your bills. Pay all your bills on time including rent or mortgages.
· Do not pack too soon. Well, go ahead and pack your clothes and pictures. But, do not pack away your bank statements, tax returns, or other important paperwork. Most especially, do not pack away your checkbook! More than one buyer has had closing delayed while a friend or relative hurried over with additional funds because the checkbook was in the moving van.
· Do not lease a new car. This should go under the general heading of "no new debt". It is highlighted here because, for some strange reason, many buyers do run right out and lease a new car during the intervening time between mortgage application and closing! As with any debt, this will change your "back-end ratios", and may cause you not to qualify for your mortgage.
· Do not throw away pay stubs, bank statements, or other financial documents.
· Do not spend your money needed for closing.
· In short, do nothing that negatively impacts your ability to qualify for your mortgage loan, or initiates a new round of paperwork.
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Do’s:
| - KEEP or have access to original paystubs, bank statements and other important financial documents.
- PROVIDE Earnest Money Deposit from your own personal bank account or gift funds. Gift funds are acceptable only if certain criteria is met. For additional clarification, please reach out to your loan originator to ensure that this aspect is being handled properly.
- SELLING your current home? Make sure to provide all documentation from the sale, including sales contract, closing statement, employer relocation information if applicable, etc.
- EMPLOYMENT changes such as recent raise, promotion, transfer, change of pay status (salary to commission), etc.? Make sure to let your Loan Originator know if any of these changes occur.
- BE AWARE that your credit may be pulled again just prior to closing to generate a new credit report.
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| Don’ts:
| - CLOSE or open bank accounts, or transfer any funds between accounts without talking to your Loan Originator about the documentation that will be needed for your loan.
- DEPOSIT any money outside of your automated payroll deposits, especially cash or sale of personal property, without notifying your Loan Originator. There are many guidelines in place that require substantial documentation to verify the source of these deposits.
- CHANGE jobs, employer or employment. These changes will impact your loan qualification.
- MAKE major purchases prior to or during your contract. These purchases would include buying a car, appliances, furniture, etc. These purchases may impact your loan qualification.
- OPEN or increase any credit cards, student loans, liabilities, or any other lines of credit during the loan process. These new debts will impact your loan qualification.
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These suggestions are merely that - suggestions. No one is saying, flat out, that bad things will necessarily follow if you do any of the above. They are offered as cautions. Many buyers seem to view the mortgage application procedure as an static entity, a snap shot of their financial lives at a given moment in time. It is not. It is an on-going process that can take into account everything you do right up until the day of closing.
What NOT To Do After You Apply for a Kentucky Mortgage Loan Approval
