It is well understood how strict underwriting guidelines have become over the last 18-24 months. And while there have been some significant changes to loan approval parameters, one of the biggest changes has come in the “letter of the law” interpretation that underwriters must take on the guidelines. In the golden age of lending it was common practice, and reasonable, to allow certain loan processes a certain level of flexibility. Today not only do “i’s” have to be dotted and “t’s” crossed, but they have to have the correct font and type size to pass through the gatekeepers approval.
For instance just recently a loan approval was held up by an underwriter because the borrower’s bank statement was accidentally copied cutting off a small portion of the right-hand margin of one of the six pages in the statement. All that was missing were the cents (“.xx”) of a handful of checks that had cleared the previous month. Clearly these missing pennies were irrelevant in the scheme of the approval. But it is poignant in how anal-retentive the documentation process has become because the loan would not be approved until a clean copy of that page was received.
With that in mind, here is a list of 10 things you should absolutely NOT do between heading into a mortgage application to the day after your loan closes/funds. I have been doing this a long time and my job is to get your loan approved, ignoring these items will elevate the paperwork as well as the potential for a declined loan.
- Don’t transfer money between bank accounts.
- Don’t quit your job to change industries or start up a new business.
- Don’t switch from a salaried job to one that is commissioned or heavily bonus-based.
- Don’t buy a new car or acquire a new car lease.
- Don’t forget to pay all your bills on-time – even ones in dispute.
- Don’t open any new debt, especially credit cards or department store cards.
- Don’t accept a cash gift without understanding the paperwork necessary to allow it.
- Don’t make random, undocumented deposits into your bank account.
- Don’t get frustrated when asked to provide additional documents or explanations
- Don’t withhold information from your Loan Originator.
This list is by no means a comprehensive one, however it is meant to signal this is a new era in the mortgage environment. Some of these seem so obvious, but you can’t believe the mistakes made by well-intentioned borrowers. There are more “gotchas” than ever before and it is more important to do your financing due diligence well in advance of needing a loan not to mention working with a mortgage professional who is ever mindful too.
Guest Author Dirk Walker, CMPS® is with W.J. Bradley Mortgage Capital Corp. and has been a loan originator for 18 years. He is a Certified Mortgage Planning Specialist.