Finding the right home is half
the battle. Getting the loan is often the other. The loan process—from the time
you apply for a loan to the time you close on your home—is usually 30 to 45
days. During this time, you want the variables that affect the loan, such as
your income and your credit card balance, to remain constant. Even the smallest
changes can cause your loan to fall through. To improve your odds of getting a loan
approved—and keeping it approved through the closing, take a few precautions:
1.
Don’t change
your employment status. If you’ve been in a salaried position for 10 years,
don’t switch to a job with a commission structure while you are waiting for
your loan to get approved. Many loan programs require that people show at least
a two-year history of the same kind of work or similar pay structure.
2.
Don’t make
any major purchases, such as cars or furniture. Doing this can affect your debt
ratio and cause the loan to no longer qualify. Your credit picture at closing
needs to be the same as the credit picture you had when the loan was initially
approved.
3.
Don’t apply
for a credit card, new loan, or co-sign for another loan. Applying for new
accounts requires a credit rating report. Credit checks lower your credit
rating, even if your rating is high. In addition, mortgage bankers have to
count the new debt in the ratio, which can cause delays or change an approval
to a denial.
4.
Don’t change
bank accounts or make undisclosed deposits or withdrawals unless you have a complete
paper trail.
5.
Don’t delay
in providing all paperwork your loan officer asks for. Each step in the process
has a deadline. Missing even one can cause a delay in closing and potentially put
you at risk of losing the contract.
6.
Don’t pay
off collections or charge-offs before discussing it with your loan officer. Even
paying off a negative debt can cause a credit score change. Again, you want
your credit status to remain constant through the process.
7.
Don’t close
credit card accounts or increase credit card debt. Wait until after the loan
closes to make these types of changes. Changes in credit limits and scores,
even positive ones, can have negative consequences before closing.
8.
Don’t pay cash
for home or termite inspections. Often, these are costs paid by the seller at
closing. To get reimbursed, you have to show more than a paper receipt. You
have to show a canceled check or cashier’s check to prove payment.
Source: Robin Schilling, senior
mortgage banker at Flat Branch Home Loans, in Springfield, Mo.
Office phone: 417.720.2007
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