A blog from Pacific Mortgage Co

Do this to avoid drama with the loan process

Do this to avoid drama with the loan process

Surprises are best saved for birthday parties – not the home buying process. A major hiccup in the loan process is the worst case scenario that keeps both buyers and sellers awake at night. To avoid problems in escrow coming between you and your dream home – or your money – do this to avoid home loan drama.

Do: Keep finances steady

Lenders want to see consistency in your bank statements and credit reports; billed pays on time and direct deposits from paychecks on a regular schedule shows lenders you have the financial means and responsibility to cover the mortgage. Spending beyond your means, carrying too much debt, or even receiving large, unexplained deposits can affect things before closing.

Don’t: Open new lines of credit

While most people know not to buy a car while in escrow, many buyers still attempt to finance new appliances, open new credit cards, or secure other lines of credit before closing. Banks often run a second credit check before closing; avoid major purchases during escrow to keep closing on time.

Do: Make a full disclosure on the application

Underwriters are notorious sticklers; they want to ensure every i is dotted and t is crossed before approving the loan and sending the mortgage into escrow. To avoid a delay in closing, make sure you disclose judgements, liens, debts, accounts, and other information up front

Don’t: Assume closing costs are the same every day

Closing costs can vary widely depending on when in the month closing occurs; changing the closing date may seem easy, but it can leave you saddled with additional prepaid mortgage interest. For short sales or foreclosures, make sure to save a little additional extra cash for closing costs as closing is frequently delayed.

Do: Update mortgage rates

If you received pre-approval weeks – or months – before you found your new home, make sure to ask the lender for updated mortgage rates once you have a firm closing date. Mortgage rates can change significantly in a short time; getting updated information can help you better estimate monthly payments as well as how much you’ll need at closing. Worried about locking in the right rate? Ask your lender about mortgage rate lock.

Don’t: Read the contract at closing for the first time

One of the most tedious, yet important, parts of the closing process is reading and signing the closing documents. When your future home and moving plans in the balance, however, few homeowners take the time to closely scrutinize the documents. Avoid mistakes in the closing documents by asking to read and review them in advance. This can benefit both buyers and sellers as it ensures there are no costly or time consuming errors in the contracts.

by Author, Dec. 12, 2018

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