In light of the current market and tightening of credit underwriting standards by both lenders and insurers these days I though I would send out a friendly reminder to mortgage customers about being real careful what you do between the time your mortgage is approved and when it funds. A few mortgage lenders and insurers have been doing something lately that they have not done in a long time, and that is pull new credit bureau’s prior to funding, especially if there is a long period from the time of your approval and the funding.
You may think the 8 rules below are onerous but in these tight times I would follow them. If you don’t just understand you are “rolling the dice” and the consequences can be costly.
- Don’t buy a new car, or trade-up to a more expensive lease. In fact if you have a lease coming due during your approval then disclose it as being paid off, and consider renting a car for the month or so during your approval waiting period.
- Don’t quit your job, or change jobs. I know this seems obvious, but trust me I have seen everything. People think “but it was a better job, and better pay” but what if it is on probation and you have 5% down, and a gifted down payment, and a 650 beacon score? Your approval is in jeopardy. At least talk to your professional mortgage planner BEFORE you do anything.
- Don’t change industries or go self-employed or on contract, even if it is in the same industry. Delay the start of your new job, self-employment or contract status until AFTER the funding date of your mortgage.
- Don’t transfer large sums of money around between bank accounts. Lenders get especially skittish about this one. Be ready to document ANY cash transactions, or money movements.
- Don’t forget to pay your bills, even ones that you are disputing. This one is a killer. If the lender pulls your bureau prior to closing and sees a collection or a delinquent account the best you can hope for then is that they make you pay off the account before they will fund. You do run the risk they pull their approval and then you are seriously scrambling.
- Don’t open new credit cards. You know you can wait until after funding.
- Don’t accept a cash gift without documenting properly with your mortgage planner. This one is most common often right around a wedding. If you have a bunch of cash to deposit before your funding date, then talk to your mortgage planner as the best way to do it BEFORE you deposit it.
- Don’t buy furniture on the “Do not pay for ____ years plan” until after funding. Even though you don’t have to pay it will still be reported on your credit bureau, and will become an issue, especially if your approval was tight to begin with.
I am not saying you can’t break one of these rules, but if you need to or want to then check with your mortgage planner BEFORE you do, to be safe. Times have changed and lenders are tough.
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