8 Behaviors To Avoid While Your Mortgage Application Is “In-Process”
For all the talk of how tough it is to be "mortgage approved", the basics of mortgages haven't changed. Mortgage approvals are still a combination of showing good income, equity, and credit.
For some mortgage applicants, though, it's not getting approved for a mortgage that's the hard part -- it's staying approved for a mortgage.
There are plenty of land mines in the mortgage approval process. You'll want to stay clear of them.
When Things Go Wrong With Your Mortgage
Mortgage approvals take time. In a typical home loan market, 45 days is normal time frame.
Approvals can take longer, though, depending on the market environment. For example, if rates are low and there's a refi boom on-going, getting a refinance to close can take as much as two month -- especially for "complicated" loans which require additional paperwork such as the 5-10 Properties Program.
Banks just don't have capacity to work much faster.
Closing times can also be delayed for buyers of short sales and foreclosures. Loans for distressed sales and REO sometimes take 6 months or longer to get to settlement.
Thing is, during that "extra time" it takes to close -- whether it's 3 weeks, 3 months or longer -- your life is subject to unexpected change and when your life changes, your loan can, too.
For example, if lose your job, become ill, or have your home damaged by storms, your lender can rightfully revoke your mortgage approval -- even if your loan was previously cleared-to-close.
Some life events are beyond your control. You can't control sickness any more than you can control Mother Nature. But some events are within your control.
In the world of mortgages, good behavior does matter.
Bad Mortgage Behavior, Defined
Keeping "good behavior" in mind, here are 8 things you should absolutely not do between your date of application and your date of funding. Any one of them could force a revocation of your mortgage approval.
Ignore these rules at your own peril.
- Don't buy a new car or trade-up to a bigger lease
- Don't quit your job to change industries or start a new company
- Don't switch from a salaried job to a heavily-commissioned job
- Don't transfer large sums of money between bank accounts
- Don't forget to pay your bills -- even the ones in dispute
- Don't open new credit cards -- even if you're getting 20% off
- Don't accept a cash gift without filing the proper "gift" paperwork
- Don't make random, undocumented deposits into your bank account
And that's it.
Now, you may find it 100% impractical to have follow these rules to the letter. I know that.
For example, if your car lease is expiring, you have to do what you have to do. Renew the lease. Before doing it, though, check with your loan officer -- spreading your lease over 60 or 72 months may be better for your debt-to-income (DTI) ratio.
The same goes for accepting cash gifts from parents. There's a right way and a wrong way to accept a cash gift for a purchase and if you do it the "wrong way", your lender may disallow the gift and deny the loan.
These are just 8 of the behaviors which could sabotage your loan. There are more, of course, and your lender will help you identify them.
Good Loan Approvals Start With Low Mortgage Rates
For today's U.S. home buyers and refinance household, mortgage approval times are running longer than typical. The extra time leaves more opportunity for "things to go wrong" -- especially as low mortgage rates lead to underwriting backlogs nationwide.
Don't let your mortgage get un-approved. Get today's low mortgage rates and follow steps to protect it. Personalized mortgage rates are available online for free, with no obligation whatsoever.