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Mortgage Financing

10 Commandments of Mortgage Financing

#1) Thou shalt NOT change jobs.

Any change in your job status will cause your file to be re-underwritten and reconsidered.  This may cause a delay with your loan process or possible denial of your loan application.

#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.  Co-signing any type of car loan, student loans, or other loan would result in inquiries into your credit and additional financing responsibilities.  All of these could result in loan closing delays or denials.

#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 quality for when purchasing a home.  It is very important to avoid applying for these types of loan throughout the loan process.

#4) Thou shalt NOT use charge cards excessively or be late with payments.

Excessive use of credit cards can have two negative effects on your credit rating.  One, inquiries will be recorded by credit bureaus and could decrease your credit score.  Two, balances on credit cards exceeding 35% will affect your debt to income ratio and could decrease your credit score.  Also, late payments of any sort can decrease your credit score, increase your home loan interest rate, delay loan closing, or cause loan denial.

#5) Thou shalt NOT spend money set aside for closing.

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

#6) Thou shalt NOT omit debs or liabilities from your loan application.

Please be very honest and clear about ALL of your debts or liabilities early in the loan application process.  Having the right information will allow your Loan Originator to provide you the best qualifying loan value.  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 denials of your home loan.

#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 in delays or even denials.

#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.  As this applies to vehicles, furniture, appliances, and household items; it also applies to ANY credit checks such as applying for additional lines of credit could negatively affect your ability to qualify for a home loan.

#9) Thou shalt NOT make large deposits without first checking with your Loan Originator.

Abnormal deposits or large deposits into checking, savings, or any financial account beyond normal payroll deposits must have money sources verified by Underwriting.  Making these deposits could result in loan processing delays or even denials.

#10) Thou shalt NOT change bank accounts.

Because the loan process requires a two month history of reserve funds, opening new financial accounts near a closing date may void this history.  New bank accounts will not have the two month history available and cannot be used.  This may result in loan closing delays or denials.

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