Avoid 6 Things While You Are Waiting For A Mortgage Approval

A home buyer should know that there are 2 stages to mortgage loan approval. We have heard of preapproval. When the buyer submits the loan application to his loan officer for preapproval, Stage 1 begins.

A pre-approval is a “walk-through” mortgage approval that says — at a given purchase price and downpayment amount — the home loan application will very likely be approved.

Stage 1 ends when the buyer signs a purchase contract on a home. At this point, the “walk-through” approval is useless because the buyer now needs a real home loan approval from an underwriter and not a loan officer.

Stage 2 of the process occurs when a mortgage underwriter is reviewing credit, income, assets, job history and probable other things. It is the job of the underwriter to insure that the buyer can meet the lending institution’s criteria for loans.

If Stage 1 was well completed by the loan officer, Stage 2 should be a formality. This stage usually proceeds as expected. However, it is possible that a buyer may innocently alter his “risk profile.” If this occurs, it will alter his loan risk thus affecting the mortgage approval. No one means to do this, but it just “happens.”

During the mortgage approval process, the buyer must not do anything that will increase his loan risk during the time between Stages 1 &2. Risk needs to remain consistent. The following are 6 things of the “Honey Don’t” list for this interim period:

1. Don’t quit your job, change careers, or accept a “commission only” position. 2. Don ‘t miss a payment to a creditor 3. Don ‘t buy a new car or increase any vehicle payments 4. Don’t accept cash gifts without talking to your loan officer(there are gift rules) 5. Don ‘t open a new credit card no matter how great a deal 6. Don’t transfer large amounts of cash in/out of bank accounts

There may be some other “don’ts” but this is a good starter list. It may not be possible to avoid some errors. Talk to your loan officer if you have to break a “rule.” You need to have professional guidance during this process because There are a lot of “snafus” possible during the process.