You may have heard horror stories from people who have been through the mortgage process. In reality, obtaining a mortgage can be complicated. Below are some things to do and not do to help ensure those complications don’t create a bad experience for you.
DO NOT Obtain new debt.
A mortgage is a debt. During the approval process, your other debts must be analyzed. This is done to ensure you can make the monthly payments on this new debt despite the current debts you have. If you obtain new debts during the mortgage process, all of your debts must be re-analyzed. This will slow down the mortgage process and create more paperwork for you as a borrower.
DO NOT Make large deposits into your accounts.
A fairly standard lending guideline requires you to “source” any deposits over 50% of your gross monthly income. Sourcing a deposit is proving where the money came from. Lenders want to make sure this large deposit is not an infusion of money from a new debt or from an illegal source. If a large deposit is made, you will have to obtain additional paperwork to meet this guideline, likely slowing the mortgage process. If you do need to make a large deposit (i.e. gift from family, etc…) then be sure to communicate that to your Mortgage Advisor ahead of time. Then he/she will be able to guide you through that process correctly.
DO NOT Make cash deposits.
As mentioned above, large deposits need to be sourced. Cash deposits are extremely difficult to source properly. Unfortunately, a signed letter from you saying you are finally depositing the money that has been “stored under the mattress” will not satisfy the Lender’s requirement to confirm the money is not a debt or obtained illegally. If you have cash that is going to be used as part of a home purchase, make sure it’s deposited months before starting the process—not in the middle of it.
DO NOT Change jobs.
Part of the mortgage approval process is providing evidence of current income. This is needed to determine how the monthly payments for the new mortgage debt will be made. If you change your job, this significantly impacts the ability to obtain needed proof. If at all possible, we strongly recommend waiting until after the mortgage transaction has closed to change jobs.
DO NOT Go out of town.
In most cases, signatures will be required throughout the process. Documentation and other information will also likely need to be provided throughout the transaction. Going out of town makes executing this tough.
DO Ask questions.
A mortgage is a long-term commitment and an extremely large debt. Make sure you know exactly what you’re getting into. Asking questions will help you gain a complete understanding and give you peace of mind.
DO Respond quickly.
As detailed here, a mortgage transaction is full of processes and steps. Responding to needs quickly helps ensure each process happens in a timely fashion. This will go a long way in creating a better mortgage transaction.
DO Communicate changes, plans, and expectations.
If you’re unable to avoid something from the “Do Not” list, communicate these things ASAP. The sooner everyone involved knows about these, the sooner adjustments can be made to ensure your mortgage closing experience is the best it can be.
DO Start the process early
The number one thing you can DO is be prepared. The best way to do that is to start the process sooner rather than later. It doesn’t matter if you are 30 days or 5 years away – meeting with a Mortgage Advisor ASAP is a good idea. In this meeting, they will be able to go over where you are at, discuss where you want to be, and make a game plan to get there. This meeting will be packed full of useful information and wise advice to put yourself in the best possible situation prior to you officially being in contract.
More than anything, a pleasant mortgage experience requires a wise advisor who is willing to put your needs ahead of their own.
Schedule an appointment with one of our Mortgage Advisors below!