Borrower Do’s and Don’ts
The journey to homeownership is often marked by excitement, anticipation, and the fulfillment of a life-long dream. It can also be fraught with potential stumbling blocks when attempting to secure a loan.
The Julie Payton Mortgage Team has prepared a list of common Do’s and Don’ts to help ensure a seamless closing.
DON’T Make Large Purchases or Accrue Additional Debt
Avoid acquiring additional credit lines or purchasing a car, appliances, or new furniture for your home on credit, as this will change your (DTI) debt-to-income ratio. Lenders use your DTI to assess your ability to manage debt responsibly. A lower DTI indicates that you are less risky to lend to, making it easier to qualify for loans.
DON’T Change Jobs
A change in compensation may affect your ability to qualify. Borrowers must have a 2-year history of bonus/commission and overtime to be counted as income. Lenders will verify income within 48 hours of closing as a quality control check.
DON’T Co-Sign a Loan
This will show up on your credit report as additional debt and be applied to your debt-to-income ratio.
DON’T Negotiate Your Contact with an Allowance and Expect Cash
An allowance can only be used to pay closing costs and/or prepaids. Allowances are not available as ‘cash back’ at closing.
DO Bring a Cashier’s Check
Your cashier’s check should be made out to the title company for your closing costs. You can also talk to your closing agent about wiring options.
DO Notify Your Broker of a Change in Salary or Address
Any changes of salary or compensation from what is notated on your loan application should be reported to your broker immediately, as this could affect your ability to qualify. A change in address should be also reported, as verifications will be made on rental/mortgage residences over the last 2 years.
DO Keep Documentation on Large Deposits
Keeping a paper trail is necessary to provide proof of financial transactions. Copies of checks, transfer of funds, deposit slips, loan paperwork, forms to liquidate assets, etc. should be readily available upon request from your lender. Notify your loan originator if you intend to transfer or move funds from one account to another.
DO Obtain Homeowners Insurance
You will need to carry homeowners insurance with coverage equal to the amount of your total loan or the replacement value of the home. Provide the agent’s name and number to your mortgage broker so final arrangements can be made. If coverage is less than the required minimum, the agent should provide a Reconstruction Cost Estimate (RCE).
If you’re ever are uncertain about what to do, please contact your loan officer for guidance. By adhering to these recommendation, you can navigate the complex and sometimes challenging mortgage process more effectively. With careful financial planning, a strong credit profile, and informed decision-making you will be well on your way to achieving your dream of homeownership.
Remember, seeking guidance from professionals can be invaluable in making the right choices along the way. Have questions about the mortgage process? Let’s schedule a free consultation: https://calendly.com/juliepaytonmortgageteam