What to avoid while your mortgage loan closes.Unlike an audit, a mortgage is not a snapshot of a financial situation at a point in time. The mortgage application is an ongoing process, one with which your professional mortgage broker is thoroughly familiar. Although not common, the process may even include information received as late as the actual day of closing.
Material changes in the information initially used to consider your qualification for a mortgage loan can derail the process. There are a number of areas I advise my clients to avoid while waiting for the close of a loan. Top among them is to not take on any new debt. Additional debt can change the relationship of your income to your debt, or back-end ratio. This could appear to make the loan have added risk associated with it.
Keep your financial records close by, because you may need them to provide additional or clarifying information to the lender. This includes items such as tax returns, bank statements, etc. If there is a need for additional funds, be sure to have access to your account.
If possible, try not to move to a new job during the period between the mortgage application and the closing on your new home. Lenders are partial to stability, and length of employment is one of the factors they consider. There are ways to present this information in a more accurate light, and your mortgage broker can discuss this with you should the need arise.
While it might seem to be a way around the admonition about not taking on any new debt, even leasing a new car will be registered as new debt and could affect your back-end ratios, perhaps causing a non-qualification for the loan.
The basic rule to follow is to do nothing that could cause a negative impact on qualifying for your mortgage loan. You also want to avoid any action that requires another review of your paperwork and additional information. Finally, when in doubt, consult with your mortgage broker. They have the experience and training to help you successfully conclude your loan approval.
Premiere Mortgage has offices on Maui and Kaua‘i and provides a wide range of services to the real estate community. Tricia Morris may be reached on Maui, in Kihei, at 874-8800, Wailea, at 891-8900, West Maui at 665-8800, on Kaua‘i at (808) 822-2300, or toll-free at (800) 813-7711.