10 “Do”s & “Don’t”s For Surviving The Mortgage Process
You’ve found a beautiful new home and you’re ready to buy. You’ve been working with a dedicated mortgage professional, like the team here at Call Federal, and all that stands between you and move-in day are some papers full of financial fact-checking and legal jargon. What’s that all about?
In the first part of our two-part series on getting started in your mortgage process, we prepared you for everything that you’ll want to do when you apply for a mortgage. In this post, we’ll share what you should and shouldn’t do while your paperwork is being processed.
Mortgage Process Do’s & Don’ts
Don’t Quit Your Day Job
But seriously, a change in employment status will definitely jeopardize your mortgage. If you know ahead of time that you’ll be starting a new job during the process, you’ll need to discuss this with your loan consultant to properly weigh your options and chances of a positive outcome.
Don’t Get Credit Happy
Mortgage shopping is one thing, but now is not the time to buy a new car or splurge on furniture before you’ve even got the keys to your new home. Applying for credit of any kind from anywhere while your loan is being processed could prevent it from closing. Once again, if you believe the credit pull to be unavoidable in your circumstances, you’ll want to inform your loan consultant of this course of action ahead of time.
No Surprise Money Supplies
This may be a lesser known tip when it comes to securing a mortgage, but now is not the time to be making any large deposits or transfer money unless you can fully document the funds. Some common scenarios we encounter include:
Some people are blessed to have a family member willing and able to contribute to their home buying process. Let your mortgage consultant know if you’re expecting this sort of contribution, as there are restrictions and procedures that apply when it comes to considering such a gift in your closing process.
Transfer of Funds
If you’re pursuing a mortgage, it can be good to have multiple sources of savings to bring to the table. But be sure to work with your loan consultant to document where all funds are coming from. Too many transfers can be a real bugaboo!
In some cases, a joint account holder will apply for mortgage where the deed is only in one person’s name. The bank will need letter of explanation from non-borrower that the potential mortgagee will have full access to the funds.
Cash at home
Some folks literally keep significant savings in a cookie jar. Please speak with your loan consultant before depositing any large sum of cash.
Breaking Up Is Hard To Do (& Makes A Mortgage Play Hard To Get)
If you are separated or divorced, regardless of the timeframe involved, you must provide separation agreement, property settlement agreement, and divorce decree. In generally, a divorce decree will reference any previous agreements. Also, if you are obligated to pay child support or alimony, this will be considered so, please, provide all information. If you’re on the receiving end of such arrangements and want to use it as a qualifying income, you must present proof that payments have been consistently received over time.
Don’t Forget About Other Holdings
If you are on title or in a trust on other properties, you’ll need to provide an accounting for them. Our reporting will show any such properties; if they were foreclosed up or involved in a short sale, the lender will need that documentation.
Be Aware of the Rules for Retirement Funds
When using retirement funds as part of your mortgage qualification, be sure to provide the terms of withdrawal. You may need to work with your retirement account manager to provide documentation that shows evidence of liquidation and receipt of funds.
Do Shop Around for Homeowner Insurance
Not all home insurance is the same, so it pays to see what’s available to you, by researching multiple vendors. You’ll need this in place at least three days before your loan can be sent to closing.
Do Have Cash For Closing
Your lender will give you the exact amount needed at closing. You’ll need a cashier’s check made payable to either the attorney’s office or title company. If you’re paying your closing costs via wire transfer, you’ll want to make sure the attorney or title company officer receives the funds in advance, generally 24 hours ahead of time. Neither an attorney or title company will conduct the closing without evidence of funds.
Your loan consultant, as well as all the other parties involved, are doing all they can to get you into your new home. Building relationships go a long way to smooth sailing.
One Last Thing… Know How To Pay
After you have signed all the documents, be sure to look for one last thing – payment details! It should be included in your closing package; for your first you do not see one, reach out to your loan consultant. They can send you the letter that tells you when and where to send the payment.
You did it! You’ve survive the mortgage process. Now just sit back, relax, and bask in all the wonderful things about your new home.
If you missed part one of this two-part series, you’ll want to check it out to make the most of your mortgage process. I hope you’ve enjoyed these first two posts; I’m looking forward to sharing more mortgage-related topics with you, including what to do if you and another potential home buyer get into a bidding war, how short sales and foreclosures can change the buying process, as well as the finer points of APR, title insurance, and more. If you’d like to get together and talk about getting your mortgage process started today, give us a call at 804-274-1200 or via email: [email protected]. Thanks for reading!