Home Purchase To Not Do List

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Mortgage and Lending

Some Do Nots of HomeBuying

It is important for you , as a home buyer, to know that the documentation used to support your loan approval can be re-verified even until the day of closing.

You  may be asked for updated pay stubs and bank statements. Most lenders verify you are still employed within a day of your loan closing.

Credit updates are also generally repulled just prior to your closing date.

As loan approval requirements get tougher and tougher, it is important to remember these lender rechecks.

Nothing is worse than going from an approval to a denial only days before your loan closes because of something you could have waited to do.

And it does happen.

So with that in mind here are Some Do Nots.  

 

 

Do not make bank deposits other than regular pay income deposits in the bank accounts you are using to qualify for your purchase. If you need to deposit anything unusual, be sure to discuss with your loan officer the documentation that may be needed.

 Bank statement documents the assets needed for your home purchase

 

 Keep bank account balances high

 

Do not bring account balances below the amount used for the approval. Your bank accounts will be checked again prior to closing. The lender may require to see the most recent statement. Generally the lender will ask to verify that your earnest money and appraisal/credit report charges have cleared the account. Your funds to close must remain in your account, and the needed funds to close may very well include a minimum amount in reserve.

 

Dropping your account balance to a level below that used for your approval is risky business.

 

 

 

 

 

 

 

 

 

Do not have return checks or overdraft protection. This is an extension of the previous DoNot. The lender considers your financial management ability as part of the loan approval. It does not look good for your bank statement balance to fall into the negative just prior to closing your home purchase. Even if you have overdraft protection, take special care to avoid going negative. Even if it does not impact your actual approval, it could cause closing delays or require unnecessary last minute documentation.

 

 Avoid any overdraft activity

 

 New purchased can jeorardize your home purchase

 

 Do not incur additional debt. This is probably the biggest loan closing killer. A new car. Some new furniture for your new home. Discuss with your loan officer any new debt - before you apply. Also mention any debt that has not shown up on your credit report when you apply.

 

 

Do not open new accounts. This is the same as opening new debt, but I list it separately because some people might not consider a department store charge card as a new debt. Any new account, even if you might not charge anything to it, should wait. The inquiry or the new account itself might impact your credit score. Plus it will just be additional, and unnecessary, documentation at the last minute to show that you have not used the new card.

 

 New credit cards can hurt your scores

 

Any change to your finances - income, employment, bank account charges, bank account deposits, new credit, even new credit inquiries - should be discussed with your loan officer before they take place.

 

 

Posted by

Thank you for visiting. This is the professional blog for

Richard Smith
NMLS# 184479 TN# 104002 GA# 28928 

Conventional, FHA, FHA 203k, HUD $100 down purchases, VA,

Rural Development ( USDA), and Jumbo Loans


Lending in Chattanooga, Tennessee and Georgia for over 20 years.

Sierra Pacific Mortgage

Cell phone: 423-280-0345 Email: Richard.Smith@SPM1.com

Visit my website to inquiry about a home loan.

Read my most recent articles in Scotsman Guide.

This blog represents the opinions of Richard Smith. The posts and comments written on the blog do not represent the opinions or positions of Sierra Pacific Mortgage. 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Judi K Barrett 12/23/2011 07:40 PM
  2. Joy Daniels 10/05/2012 05:18 PM
Topic:
Home Buying
Location:
Tennessee
Groups:
Tennessee
Georgia Real Estate
First Time Homebuyer
Chattanooga Real Estate
Tags:
home financing
new home
credit qualifying
home purchase

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Rainmaker
211,180
Richard Smith
Chattanooga, TN
FHA VA Rural Development in TN GA

Thank you Judy.

Richard

Dec 23, 2011 07:27 PM #12
Rainmaker
211,180
Richard Smith
Chattanooga, TN
FHA VA Rural Development in TN GA

Thanks Gretchen. I need to add a couple more Do Nots - things that should not matter but do.

Richard

Dec 23, 2011 07:28 PM #13
Rainmaker
211,180
Richard Smith
Chattanooga, TN
FHA VA Rural Development in TN GA

Eric,

New debt can be purchase killer. Even debt that were before the application but did not show up initially.

 

Thanks,

Richard

Dec 23, 2011 07:29 PM #14
Rainmaker
138,089
Debbie Espinoza
Stage Presence Homes, San Diego Real Estate - San Diego, CA
GRI, Broker, SRS,ABR ePro, SFR, CNE

AMEN Richard! Great, VERY important instructions to home buyers that I am totally AMAZED that loan officers don't give out on a sheet with a RED DANGER sign on the top. These are good ways to KILL your dream of homeownership after you've already given notice on your rental, the moving truck is packed, and utilties changed over and new address cards sent. Talk about a "horror story: haha

Merry Christmas and Prosperous New Year!

Dec 23, 2011 08:21 PM #15
Rainmaker
211,180
Richard Smith
Chattanooga, TN
FHA VA Rural Development in TN GA

Debbie,

My sheet is called the No New Mercedes disclosure. But I am going to add your RED DANGER sign.

That is a good idea.

Thanks,

Richard

Dec 23, 2011 09:02 PM #16
Rainmaker
346,908
John Juarez
Prudential California Realty - Fremont, CA
CDPE, ePRO, SRES, GRI, PMN

Good advice, Richard. It is amazing how much tutoring must be given to buyers to make sure that they exhibit control and restraint in order not to jeopardize their loan approval.

Dec 23, 2011 10:22 PM #17
Rainmaker
647,022
Joy Daniels
Joy Daniels Real Estate Group, Ltd. - Harrisburg, PA

Good list of buyer tips - I bookmarked it.  Thank you and Merry Christmas!

Dec 23, 2011 11:19 PM #18
Ambassador
366,390
Rich Cederberg
eXp Realty - Albuquerque, NM
eXp Realty Agent Albuquerque

This is great advice.  I've seen it all too many times myself.  Great tips to explain to buyers from day one.  Thanks for sharign!

Dec 23, 2011 11:23 PM #19
Rainer
171,730
Luis Iniguez
Option One Real Estate - Fontana, CA
Search Inland Empire Homes For Sale - Short Sale Agent
Excellent information. Everyone needs to be aware of this, especially all buyers.
Dec 24, 2011 02:18 AM #20
Rainmaker
211,180
Richard Smith
Chattanooga, TN
FHA VA Rural Development in TN GA

John,

I actually think that there is so much that is counterintuitive about getting a mortgage loan approved, most clients need coaching about the process. Even if the loan goes through, things can cause delays because of last minute documentation requirements.

Thanks,

Richard

Dec 24, 2011 07:38 AM #21
Rainmaker
211,180
Richard Smith
Chattanooga, TN
FHA VA Rural Development in TN GA

Joy,

That is a real compliment.

Thanks,

Richard

Dec 24, 2011 07:38 AM #22
Rainmaker
211,180
Richard Smith
Chattanooga, TN
FHA VA Rural Development in TN GA

Rich and Luis,

Thanks for commenting.

Richard

Dec 24, 2011 07:39 AM #23
Rainmaker
895,372
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Richard, very good points to insure getting to the closing table. Every home buyer needs to read this post.

Dec 24, 2011 09:01 AM #24
Rainmaker
211,180
Richard Smith
Chattanooga, TN
FHA VA Rural Development in TN GA

Thanks Michael,

Some closing issues can be easily avoided with a little coaching.

Richard

Dec 24, 2011 11:05 AM #25
Rainmaker
1,186,124
Cheryl Ritchie
RE/MAX Leading Edge www.GoldenResults.com - Huntingtown, MD
Southern Maryland 301-980-7566
Good reminders. Do not make any large credit purchases just prior to closing is important, too.
Dec 25, 2011 04:07 AM #26
Rainmaker
211,180
Richard Smith
Chattanooga, TN
FHA VA Rural Development in TN GA

Cheryl,

Thanks for commenting. No large credit purchases - a good bit of advise.

 

Richard

Dec 27, 2011 11:00 AM #27
Rainmaker
418,036
Jen Bowman
Keller Williams Realty - Holmes Beach, FL
Realtor - Anna Maria Island & Bradenton FL

One of my buyers bought her appliances before closing and then the closing wsa delayed for a long time.  Lots of jumping through hoops and six months later we closed.  This is great info to put out there Richard.

Feb 25, 2012 02:09 PM #28
Rainmaker
211,180
Richard Smith
Chattanooga, TN
FHA VA Rural Development in TN GA

Hey Jen,

Thanks for commenting. Good to hear from you. Loans are hard enough without adding layers of difficulties. :)

Thanks,

Feb 28, 2012 09:58 AM #29
Rainmaker
1,286,068
John Pusa
Sellstate Pacific Realty - Glendale, CA
Your All Time Realtor With Exceptional Service
Richard - Thank you for sharing detailed quality information about home purchase to not do list.
Oct 05, 2012 08:28 PM #30
Ambassador
2,466,920
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

I had loan approval delayed for a dang week recently because the buyer deposited $750 to her account that turned out to be a check her mom gave her for some furniture.

GEEZ!!

 

Oct 06, 2012 03:31 AM #31
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Richard Smith

FHA VA Rural Development in TN GA
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