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.
When pre-approval is requested, it will be a preliminary home mortgage approval indicating that the mortgage will likely be approved for a certain down payment and purchase price.
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.
This procedure should be a formality if the Stage 1 loan officer did an appropriate job. Usually this stage moves along as anticipated. However, sometimes the buyer changes his loan “risk” without intending to do this, but affecting the mortgage approval. The buyer doesn’t mean to decrease his loan probability, it “happens.”
So, consider this a quick primer of what not to do while you’re between Stage 1 and the completion of Stage 2 of the home loan approval process. Following these pointers will help keep the risk profile consistent.
1. Don ‘t miss a payment to a creditor 2. Don’t transfer large amounts of money in or out of your bank accounts (large may have different meanings to different people) 3. Don ‘t accept gift of cash without talking with your loan officer first (There are rules for gifts) 4. Don’t buy a new car (or increase loan or lease payment) 5. Don ‘t quit your job or change career(don’t switch to a “commission” job ) 6. Don ‘t open a new credit card (no matter the deal)
There’s other items, too, but this a good start. Now, avoiding these mistakes may not be practical for everyone. Therefore, if you know you’re going to violate a “rule”, check with your loan officer first. There are a lot of “gotchas” in mortgage lending and it helps to have professional guidance for your individual questions.
Tags: down payment assistance, economy, fha, Finance, home buying, Home equity loans, money, Mortgages, no money down mortgage, real estate, refinance, short sales, zero down mortgage