Here you are, your loan is ten days from closing. You have made it through the approval process, inspections, and appraisal. You have been packing your boxes, the apartment has been leased to a new tenant. The excitement is building for the day the dream home will be yours. What could go wrong now?
Let me tell you, one of the toughest calls any of us at Tippecanoe Mortgage has to make is to an approved buyer who at the last minute is no longer approved. How the heck does that happen, you ask?
Or for that matter-that?
Sometimes loans don't close at the last minute because of a notation the appraiser makes-such as the home is located on a private lane with no driveway maintenance agreement or the well is shared by the neighbors and there is no shared well agreement. But more often than not, the loan is sent hurtling off the rails by something the borrower does themselves.
In our loan application packet we have a form that is formally called The Borrower's Acknowledgment Form. I call it the "Don't Do Anything Silly" form. The form is a list of things a borrower should not do prior to the closing of their home loan. They include such things as:
1) Do not open any new credit cards
2) Do not increase balances on credit cards or loans
3) Continue to make all monthly payments on time
4) Do not take out any new bank loans, 30 days same as cash loans or co-sign for anyone on anything
5) Do not quit your job or change your job without speaking to your lender first
6) Do not take early occupancy of the property without speaking with your lender first
7) Do not spend your down payment money prior to closing
8) Do not buy a new car unless it has two bedrooms and a bath because more than once, it has caused a loan to crash.
These sound like pretty common sense items, right? This list was derived, sadly, from real people doing exactly the above mentioned things who then were denied right before closing.
If new credit is opened debt ratios can become affected- and possibly create a situation where the monthly consumer debt is too high for the rules of the mortgage.
Most lenders do a last minute credit pull prior to closing-so if you have bought new appliances and put them on a credit card or taken out an additional bank loan to cover them-it will be discovered. Likewise lenders also check employment immediately prior to closing. We have had borrowers who quit their jobs thinking that the lender wouldn't find out. They always do.
One situation that we have encountered more recently is moving into a home prior to closing. With most loans it is okay, however it is a distinct no-no if your loan is an FHA loan. FHA does not allow pre-occupancy. So be sure to ask if your loan allows pre-occupancy prior to moving your furniture in before closing.
Paying your rent and current mortgage is also important. Just one late rent or mortgage payment while in the loan process will earn you a denial. Credit is updated throughout the process so be informed that non payment will no doubt be caught.
So keep the credit cards in your wallet, drive what you have been driving all this time, and pick out the new appliances and furniture but don't pay for it until you are safely closed. Once you own the home you can go back to a more normal way of living. It's only 30-45 days. A new house is definitely worth it.
This is what we want to see on closing day
clipartbest.com
Not 
No comments:
Post a Comment