Here in Redding, California, the basics of mortgages are the same. Mortgage approvals are still the 3-legged stool of income, equity, and credit. Sometimes, though, it's not getting approved that's hard -- it's staying approved. You would do well to pay close attention to the following details.
When Things Go Wrong With Your Mortgage Approval:
Mortgage approvals take time. In a typical home loan market, it's about 3 weeks from start-to-finish. Approvals can take longer, however, depending on market conditions. For example, if rates are low and there's a lot of people refinancing their homes, a refinance can take 6 weeks to close. Banks don't have capacity to do work much faster. Or, if you're buying a home that is a short sale or foreclosure, expect delays there, too. With REO, it can take up to 6 months to get to the closing table. The thing is, during that "extra time" -- 3 weeks, 3 months or longer -- a lot can go wrong, and when things go wrong, your loan goes bad. For example, if you lose your job, become ill, or see your home damaged by storms, you may lose your mortgage approval -- even if you were previously cleared-to-close.
Unfortunately, these are all events that are beyond your control. You can't control sickness any more than you can control Mother Nature. But you can control yourself during those extra few weeks. Good behavior matters in mortgage.
What is Bad Mortgage Behavior?
Keeping "good behavior" in mind, here are 8 things you should absolutely not do between your date of application and your date of funding. I've been doing this long enough that I can say with certainty: Ignore these rules at your own peril.
- Don't buy a new car or trade-up to a bigger lease
- Don't quit your job to change industries or start a new company
- Don't switch from a salaried job to a heavily-commissioned job
- Don't transfer large sums of money between bank accounts
- Don't forget to pay your bills -- even the ones in dispute
- Don't open new credit cards -- even if you're getting 20% off
- Don't accept a cash gift without filing the proper "gift" paperwork
- Don't make random, undocumented deposits into your bank account
And that's it! Now, you may find it 100% impractical to have follow these rules to the letter. I know that. For example, if your car lease is expiring, you have to do what you have to do. Renew the lease. But before doing it, you should check with your loan officer to see if renting a car in the short-term, instead, would be a more mortgage-friendly solution instead. The same goes for accepting cash gifts from parents. There's a right way and a wrong way to accept a cash gift from family and if you do it the "wrong way", your gift may be prohibited from use as part of your downpayment funds. There are a bevy of "gotchas" in Mortgageland and you can't expect to know them all. These 8 rules, however, are a good start. If your loan is in process and you have any major financial decisions to make, please consult your loan officer before proceeding.
Get Low, Long-Term, Locked Mortgage Rates: Mortgage refinances take time and the best thing while your loan is in process is to keep the status quo. You can't control nature, but you can control you. Be smart with your finances and don't let your mortgage get un-approved.