Avoid 6 Things While You Are Waiting For A Mortgage Approval
Wednesday, August 12th, 2009
When buying a home, there are two stages in the home loan approval process.Stage 1 starts when a homebuyer submits a mortgage application to his loan officer for a pre-approval.
A pre-approval is a “walk-through” mortgage approval that says — at a given purchase price and downpayment amount — the home loan application will very likely be approved.
This preliminary approval becomes obsolete once the buyer signs a purchase agreement. Stage 1 is now over because the buyer must now secure the actual loan from an “underwriter” and not the loan officer.
It is the job of the “underwriter” to make sure that the buyer can meet the lending criteria of the banking institution. He does this by reviewing the buyer’s credit, assets, income, job history and other factors. This is Stage 2.
If the loan officer did his job in Stage 1, Stage 2 is just a formality. And most times, it all goes according to plan. Occasionally, though, a homebuyer sabotages his own mortgage approval by inadvertently changing his “risk profile”. It doesn’t happen on purpose, of course — it just happens.
During the mortgage approval process, the buyer must not do anything that will increase his loan risk during the time between Stages 1 &2. Risk needs to remain consistent. The following are 6 things of the “Honey Don’t” list for this interim period:
1. Don’t quit your job, change careers, or accept a “commission only” position. 2. Don ‘t miss a payment to a creditor 3. Don ‘t buy a new car or increase any vehicle payments 4. Don’t accept cash gifts without talking to your loan officer(there are gift rules) 5. Don ‘t open a new credit card no matter how great a deal 6. Don’t transfer large amounts of cash in/out of bank accounts
There may be some other “don’ts” but this is a good starter list. It may not be possible to avoid some errors. Talk to your loan officer if you have to break a “rule.” You need to have professional guidance during this process because There are a lot of “snafus” possible during the process.

