The home buying process is an exciting and a scary time so you need to keep those emotions in check and make sure you are doing the right things.
The last thing you want to hear 10 days before closing is “sorry your mortgage has now been declined due to new debt OR you have just changed jobs and you are on probation”
The main thing you need to do is stay in constant communication with your mortgage broker and make sure you advise them of any changes (no matter how minor they may seem to you).
The longer your closing the date the greater the need to ensure nothing changes from your original approval.
The DO’s will have been addressed throughout the approval process. Your broker would have gotten employment documentation, down payment confirmation, lawyer information, credit checks, payment information documents, purchase agreements and any other documentation required by the lender to satisfy their conditions of approval. Your broker would have issued a financing letter and a sold sign would go on the sellers home.
Remember you have not signed at the lawyers and the lender has not sent any monies so now is not the time to go crazy. You need to wait until you get into the home.
We need to address the DON’TS as this is where people get in trouble and possibly lose the home purchase (not to mention the deposit and possible legal actions).
1 Do Not change jobs/employers without checking with your broker first as this could effect the loan approval.
2 Do Not open, apply or increase any liabilities. This includes credit cards, loans, lines of credit and YES even the no interest no payments for X months options. Any increase in your debt load will effect your approval. The lenders will do a credit check if you are closing 30 days later than the actual approval.
3 Do Not let any payments get behind no matter how small they are. This includes cell phones as they are now reported on the credit bureau. Even if it may be a discrepancy you need to ensure all accounts are paid and current.
4 Do Not make any new major purchases prior to the closing date. This includes cars, furniture, appliances etc. Per above even though the store is offering no payments for 12 months the lender will use 3% of the amount financed as a payment against you which could effect the mortgage approval.
5 Do Not change your legal name
6 Do Not leave the country as you will need to be here to sign the legal documents. A power of attorney is not going to cut it. (certain circumstances are allowed but it could delay the closing)
7 Do Not use your down payment for anything other than the down payment. Make sure you keep these funds in the account that was used to get your deal approved.
8 Do Not transfer you down payment funds to different accounts. Depending on the length of time till closing the lender could ask for a re verification of the down payment.
9 Do Not co-sign a loan/credit card for anyone.
The majority of files close within 30-60 days of approval so a lot of the above does not normally happen. However I have seen it happen and not for the good. Remember you will have years in the home so waiting to get in is not a big sacrifice.
Once you are in the home you can look to do your renovations, get a new car loan or go on a vacation. Just remember that any change prior to closing can effect the approval so call your broker.
Buying a home can be stressful and overwhelming but by following a few guidelines it does not have to be. Yes things can happen but that is why your broker is there. I advise all of my clients that no question is stupid if you do not know the answer to it.
I invite your calls to discuss finance options and to show you how to get into home ownership. There is no need for it to be stressful. After all it is only a loan secured by a home. Your credit, income and down payment will determine if you qualify and if so for how much. Let me guide you on pavement instead of taking that gravel road to misery and stress.
As always comments, questions and shares are appreciated and encouraged.
Eric Gall is the owner of Avanti Mortgages (operating as a mortgage specialist for TMG – The Mortgage Group Atlantic). If you are purchasing, refinancing or renewing your mortgage contact Eric or check out his website and apply online.