Top 10- mistakes made by home buyers after making their loan application:
1. Paying off ANY debt, regardless of how small or large. EVEN if it’s not you would be paying off the debt. Having enough cash to close can be an issue and you may need all you’ve currently got…and you may need the funds from that family member for down payment instead.
2. Adding ANY more debt, regardless of how small. Don’t buy anything, even if it’s for the new house. Additions and even subtractions can lower your credit score –talk to your loan officer with any questions on this before acting.
3. Getting married or divorced, or conceal true legal marital status. Tell your loan officer immediately of any plans regarding this. The loan officer must know exactly what your legal marital status will be at the time of the closing due to state law that require certain documents to be signed or not signed, depending on this. Names of all spouses must be provided asap.
4. Moving “large” amounts of money in or out of your checking/savings accounts OTHER than payroll. If you are expecting some unusual amount of a gift or income from somewhere, be certain to tell your lender immediately, as far in advance as possible – hopefully BEFORE you take application. There is a specific process for handling gift funds that must be followed.
5. Quitting your job. Verbal verifications of employment take place at random, prior to close – even on closing day and up to several days afterwards. Misrepresenting your employment could be interpreted as mortgage fraud and result in a purchase being unwound after it has closed.
6. Starting another job. Depending on what kind/type of job it is. Without track record, may not be able to count all your income, which means you may not be able to afford the house you want.
7. Change your pay structure from salary to bonus or to commission. Without track record, may not be able to count all your income, which means you may not be able to afford the house you want.
8. Starting your own company. Likely cannot count income unless owned company for 2 years. Without track record, may not be able to count all your income, which means you may not be able to afford the house you want.
9. Changing industries that you work in. Income history and consistency is important. Without track record, may not be able to count all your income, which means you may not be able to afford the house you want.
10. Incompletely and slowly providing the loan officer with any & all of the supporting documents he/she has to ask you to provide. You will be asked early and often for documents due to the extensive and burdensome federal regulation that has been enacted as of 1-1-10 – expect these requests to be redundant, inconvenient, seemingly trivial and even last minute. If you are asked for a W-2 that does not mean a paystub. If you are asked for a bank statement, that does not mean a transaction history printed from a website – also, if the statement reads pages 1 of 6, then send ALL 6 even if the last one says “Left blank intentionally”; If you are asked for a tax return, that does not mean just pages 1 and 2.