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The 10 Commandments of the Mortgage Process

Hi everyone! Kyle Davis here to give you a little financial wellness tidbit and provide value as a wealth coach. Today I want to share some great guidelines that will help you through the home mortgage process. Whether you’re buying or refinancing a home, it’s a HUGE commitment that will send ripples through your financial life forever. Fortunately, you don’t have to go into the process blindly! This list was put together by Damien over at Celebration Funding and it’s so good, I just had to share it with you! Here it is:

 

The 10 Commandments of the Mortgage Process

 

1. Thou shalt NOT change jobs, become self-employed or quit your job.

The reason that this is so important is if you would happen to change your job there is usually a certain amount of time that you would have to wait before you would be able to close. Up to 30 days!

2. Thou shalt NOT co-sign a loan for anyone.

During the loan process, any changes to your credit report or status could negatively affect your ability to close your loan on time or at all!

3. Thou shalt NOT buy a Vehicle or you may be living in it!

Applying for credit to purchase a vehicle will be recorded as an inquiry into your credit by credit bureaus. This may decrease your credit score or decrease the amount of money that you may qualify for when purchasing a home.

4. Thou shall NOT use charge cards excessively or make late payments on ANY of your accounts.

Excessive use of credit cards can have 2 negative effects on your credit rating. One, inquires will be recorded by credit bureaus and could decrease your credit score. Two, balances on credit cards exceeding 30% will affect your debt to income ratio and could decrease your credit score.

5. Thou shalt NOT spend money you have set aside for closing.

Most conventional loans require 2 months of reserve money to be verified in your available financial accounts. Once it has been verified for use at closing, spending these reserve funds may result in loan closing delays or even loan denial!

6. Thou shalt NOT omit debts or liabilities from loan application.

Be very honest and clear about ALL of your debts or liabilities early in the loan application process. Unrecorded debts or liabilities that are found later in the process may affect the amount of money you qualify for in addition to causing delays or even denial!

7. Thou shalt NOT buy furniture, appliances, or household items before closing.

Although many people are anxious to furnish their new home, during the loan process is NOT the right time. Large purchases causing deductions in your banking accounts or additional debt on credit cards can negatively affect your loan process resulting delays or even denials. If this situation applies to you,.

8. Thou shalt NOT originate any inquiries into your credit.

As mentioned before, multiple inquiries into your credit may result in decreasing your credit score. Ability to qualify for a home loan. You may have to prove an account was never opened.

9. Thou shalt NOT make large deposits without first checking with your mortgage consultant.

Abnormal deposits or large deposits into checking, savings, or any financial account beyond normal payroll deposits must have money sources verified by underwriting again causing a delay.

10. Thou shalt NOT change banks.

Because the loan process requires a 2 month history of reserve funds, opening new financial accounts near a closing date may void the history. New bank accounts will not have the 2 month history available and cannot be used.

 

Home financing is a big deal and it’s amazing how much we can do to unknowingly sabotage ourselves right before such an important commitment. Thanks for sharing, Damien! Give their company site a visit and check them out on Facebook!