by Sherry Daniels
Ten years ago, when our second child was on the way, I made the difficult and uncomfortable decision to walk away from my career as a speech therapist and to work with my husband in business. Yet, I needed to have the security of earning an income independent of my husband and the flexibility to work from home to take care of our toddler. I became a mortgage broker and worked as one for over five years. My advice to my clients was always:
DO keep originals of all pay stubs, bank statements, and other important financial documentation. Your lender is required to update any documents that are over 30 days old prior to the closing of your mortgage loan (this is required even if your loan is approved).
DO notify your loan officer if you plan to receive gift funds.
DO notify your loan officer of any employment changes (i.e., change of employer; recent raise/promotion; change of pay status, such as salary to commission, etc.).
Yet at the same time I would warn potential first time homebuyers of the common dangers that would cause them to jeopardize their loan and the home of their dreams:
Dont’s
? DON’T Buy a new car/truck/boat/RV/etc.
?DON’T Co-Sign for a new car/truck/boat/RV/etc. ( DON’T Buy or Co-Sign on anything for that matter).
? DON’T Apply for any credit cards. Not even if they’re giving away free umbrellas in the middle of a thunderstorm.
? DON’T Request credit line increases from credit cards you already have. Most card companies will pull a credit report on these.
? DON’T Have a ‘friend’ pull your credit for you. Anything that will put an inquiry on your credit report may cause your credit score to fall and many loan programs today are based mainly on the credit score. Also, the underwriter may get suspicious of why you’re shopping so much. This includes Furniture Shopping!
? DON’T Quit your job. Most lenders now do a final phone verification of employment one or two days before closing.
? DON’T Change jobs. Please stay put until after closing. If you must change, stay working in the same line of work, at a rate of pay equal or greater than before. Also, changing from salaried to commissioned or self-employed probably will kill the deal, even if you’re in the same line of work.
? DON’T Pay off any debts or collections before checking with your loan officer. Depending on your situation, you maybe better off using that extra money for down payment. Your Loan Officer will be able to guide you on this issue.
?DON’T obtain and/or deposit sums of money over $5000 without notifying your loan officer. FNMA/HUD guidelines require documentation as to the source of these funds (i.e., copy of bonus check, copy of tax refund, copy of insurance settlement, gift letter with copy of check and deposit slips, etc.).
?DON’T close/open or transfer any asset accounts without inquiring about the proper documentation required for your loan file (i.e., if you transfer all the funds in your stock account to your savings account, documentation is required).
Despite low interest rates and unprecedented low housing prices, tighter lending guidelines and silly mistakes before closing may cause even a prequalified borrower to lose the home of their dreams. Being an educated consumer will help you to avoid the many pitfalls and traps as you navigate the road to homeownership.
Sherry Daniels manages a 20+ year Orlando based sprinkler system company. She’s developed a Done-for-you monthly newsletter that just about any service business owner (who’s too busy, or doesn’t believe he has the writing skill to create a newsletter from scratch) can use. She is the author of “Working Moms: How to Quit Your Other Job – Secret to getting Paid for Working in Your Husband’s Business ”- available for FREE (while supplies last). Sherry can be reached at [email protected]
