Tuesday, September 20, 2022 / by Carly Liszewski
We understand that the mortgage experience can be stressful. Credit scores, bank statements, interest rates, closing disclosures, loan estimates, and other paperwork may be extremely time-consuming throughout the home-buying process. That's why we're providing you with this checklist to help you get through the clutter and create a rapid mortgage process in order to focus on the important stuff: finding your ideal Colorado Springs house!
What To Do Before Closing On a Home
Get Pre-Approved Early
When pre-approved for a home loan, you know how much home you can afford. A pre-approval letter also allows you to make a better, more competitive offer because a lender has previously checked your assets and earnings to verify that you can afford the monthly payments.
Maintain Your Credit Score
Continue to pay all debt obligations on schedule, including but not limited to school loans, vehicle loans, credit cards, home equity, and mortgages. Lenders dislike seeing late payment letters on your credit record just before closing. This will alarm them and may result in higher interest rates.
Save the funds for the down payment or closing charges in a single deposit account. This must be the exact account that you indicated on the mortgage application, and it will be used to receive the certified cheque to take to the closing table.
Before Closing, Do These Things:
When you get to the closing table, ensure you bring the following documents:
• Evidence of homeowner's insurance
• A copy of the seller's contract
• The findings of your house inspections
• Any documents necessary by the bank to authorize your loan
• A government-issued identification card
Examine Your Closing Disclosure
One of the greatest ways to prepare for a loan is to examine your closing disclosure properly. This legal document details your mortgage payments, loan conditions, and any additional costs you'll have to pay. You should compare the loan estimate provided by your lender at the start with the closing disclosure. If you see any inconsistencies, ask the lender to clarify them.
Keep Your Lender Informed
Notify your lender as soon as any of the following life changes occur:
• Employment status (job loss, promotion)
• Loss of income or change of income
• Depletion of money required for the closing process
• Changes to your current name, residence, email, and phone number
• Changes to the purchase and sale agreement, including home inspection problems
When working with a mortgage banker, ask questions to feel at ease during the financing process. It may appear to be a daunting undertaking, but what matters to your mortgage agent is that you feel secure and educated about your options from start to finish.
Maintain A Clean Bank Account
Avoid huge unexplained deposits, overdrafts, or bounced checks. Lenders want to see consistent, dependable income and spending. Anything out of the ordinary might trigger a red flag. Call your lender beforehand if you have to make a major purchase or deposit. Inquire about how they propose you conduct the transaction.
What Not To Do Before Closing On a Home
During the pre-approval procedure, lenders will go through your most recent bank statement. It's not like they'll forget about it. During the underwriting procedure, they will review your holdings and bank statements a second time. You will have to explain any odd withdrawals or deposits. If you use gift cash for a down payment or closure fees, lenders will need accurate paperwork and a paper trail.
Set A New Credit Line
After applying for a mortgage, do not register new credit cards, get cash advances on existing credit cards, or seek additional loans. The additional debt will appear on your credit report and may prevent you from receiving the home loan if your debt-to-income proportion exceeds the bank's lending criteria. It could be tempting to make a major purchase such as a new car, appliances, or furniture before moving, but you will be better off waiting.
Apply and Take Off
Please do not leave the nation or go on vacation after the completion of the loan appraisal. At that point, your application is reviewed, and your underwriter could have further questions or require additional paperwork before final approval. You should be available for phone calls and emails and have the necessary documents on hand. Otherwise, your closure will be postponed.
You Should Not Co-Sign Another Loan
Co-signing somebody else's loan is almost always a terrible financial decision. However, it is especially dangerous while trying to secure your home loan. It means you are financially responsible for somebody else's loan. Yes, they may be the most responsible person you have ever met. But, lenders will still have to consider your new monthly commitment as part of your total profile. Adding another loan to the mix may jeopardize your debt-to-income ratio.
Losing employment will be a major issue. Even changing jobs might create significant challenges. Banks want to see consistent, dependable, and long-term revenue. If you choose a new position in a different industry, banks will likely apply the brakes, or if you opt to establish your own enterprise. Even if you obtain a promotion, if your income becomes mostly commission-based, this might be a major issue.
Disrupt The Timeline
Mortgage closings are time-sensitive. Even if you've locked in your interest rate, that only ensures things for a limited time. It's critical to stay on top of your schedule and submit all of your documentation on time. Otherwise, you risk missing the conditions you negotiated and having to restart the process.
Work with Professionals
Many individuals make the blunder of attempting to save cash by refusing to engage experts to help them, but this may be a bad decision since you may miss important paperwork, take too long reacting to specific requirements from the seller, and it may be more expensive in the long run.
Let Us Help You Feel Prepared
It's not always smooth sailing when going from mortgage application to closing. However, you can steer clear of some actions to minimize roadblocks and ensure your loan closes on time. You also should review your credit score and identify ways to optimize your financial health to give yourself the best chance at securing a mortgage with competitive terms. The Cutting Edge Home Team is here to help make sure your house closing goes smoothly.