The Mortgage Loan Process

A few weeks ago we discussed . The do’s and don’ts, if you will. This week we’re bringing you information direct from one of our preferred lenders, Stephanie Kyle with Wells Fargo Home Mortgage. Stephanie wants to help you to not sabotage your loan process.

When you apply for a loan and gain approval, the lender is basing that approval on the financial and personal information you provide. You will be asked for supporting documentation for verification. If the lender finds a discrepancy, you could lose your approval. If that happens while you’re under contract, you’re also potentially jeopardizing earnest money or other financial commitments you’ve made such as a home inspection or an appraisal that’s already been completed. Those are usually items that are paid up front or what is known in the industry as Paid Outside Closing (POC).

In other instances of delayed closings, you might also be responsible for an extension fee or a per diem charge from the seller for every day you don’t close as agreed.

Here’s Stephanie’s list of action items that will help ensure your loan process is as smooth as possible:

• Do Not Apply for New Credit Cards/Debt: Once you have applied for a mortgage, do not apply for new debt or credit cards, car loans, furniture, etc. even if you do not plan to use them until after settlement. This will show up on your credit report and the lender will have to prove that you have not incurred new debt or they will have to factor the new debt into your qualifying ratios. When you buy a home, you will buy items for that home. Wait until AFTER closing!
• Review Your Credit Report: Be proactive in the process—thoroughly review your credit report with your loan officer and report any inaccurate or MISSING information. What is missing on your report today could show up later and derail your closing.
• Do Not Pack Your Financial Papers: Save all of your bank statements, paystubs and credit card statements from the time you make your loan application until closing. Keep all tax returns, W-2’s, paystubs, 1099’s, K-1’s, bank statements, etc., in an accessible place. You never know what you may have to provide at the last minute with the new guidelines. Be prepared!
• Gift Funds and Large Deposits: Your lender will need a paper trail on gift funds and large deposits that are not consistent with your normal deposit pattern. If you are receiving a gift, your lender will need to verify that you have received it and that the donor has the ability to give those funds. Large deposits will have to be sourced—be prepared to show and explain where that money came from. If it was from a bonus, have the check ready. If you sold a kidney, have the paperwork and a photo of the scar. You get the point.
• Changing Jobs: This one seems obvious, but if you are planning to change jobs during the loan process, please inform your loan officer. If you are forced to change jobs, inform your loan officer immediately. You will sign a final loan application at closing. When you sign it, you will be verifying the information that it contains is accurate.
• Do Not Move Cash Around: Lenders must verify all funds for closing and the source of those funds. When you move those assets around, it creates a paper trail nightmare. The best practice is to leave everything where it is. Once your lender has verified all accounts and gives you the ”OK,” then you can play musical chairs with your money.
• Side Jobs/Self Employed Income: Lenders will verify income with the Internal Revenue Service. If you have any self-employed income, be sure to share this with your loan officer upfront so they give you a correct preapproval amount.
• Tax Extension/Amendment: Your lender will need to know if you have recently amended your taxes or have filed an extension. This will come up when income is verified through the Internal Revenue Service and could adversely affect your loan if not disclosed upfront.
• Name Changes: If you will be or have recently changed your name, please be sure to inform your loan officer. This can affect or slow down the closing process as all documents must match.

If you take a common-sense approach to the entire process, you should come out on top. As always, if you have questions, ask your lender or real estate professional. They are there to help you.

We’re always eager to answer your real estate related questions. Feel free to e-mail us at info@idealrealestateprofessionals.com.

iDeal Real Estate Professionals, LLC is owned and operated by Brandon Bramlett and C. Mark Willix and is affiliated with Maximum One Realty Greater Atlanta. For personalized service, visit us at www.idealrealestateprofessionals.com. You can also email us at info@idealrealestateprofessionals.com.