By Mike Miles
Congratulations! You found a house and you’re under contract! Now you get to start thinking about things like decorating, which furniture goes best with which rooms, landscaping, getting to know neighbors … etc. The fun stuff, right?
Enter Debbie Downer (from Saturday Night Live) … Don’t forget you still have to finish underwriting (wha-wha-wha).
In most situations, underwriting is very organized and efficient. However, things can go wrong and, in many situations, it can be the borrower’s fault. Below is a quick list of things to avoid doing … to protect your closing date.
Don’t go shopping just yet:
It’s quite natural to want to shop for appliances and furniture. Or maybe you want a new suit to celebrate your new house. Don’t do it! Your credit report is used for underwriting. That’s where lenders get your score and debt structure for loan qualifying. Lenders often re-pull credit right before closing to make sure no new debts have popped up. If any new debt shows up, it must be considered in the qualifying debt-to-income ratios. An increase in this ratio could alter the loan decision.
Don’t move money around:
Underwriters need to see a 60-day history of any account that’s being used for funds applied at closing. This includes both the earnest money and down payment funds. Moving money around from one account to another account could add layers of additional document requests. Non-payroll deposits may need to be sourced, which means getting 60-days of statements for all accounts where money is coming to and from. Getting additional documents means added time, and time can be scarce during a purchase contract period.
Don’t change jobs … or quit … or get fired:
Underwriters use income associated with the job(s) identified on the loan application. Those jobs are verified right before closing. I’ve seen situations where borrowers start new jobs during underwriting which can either delay an approval or overturn an approval. If there is nothing you can do about any situation involving your job … talk with your loan officer right away. There can be solutions, but the sooner the better to have that discussion.