While Your Loan is in Processing, DON’T Do These Things:

Written by Posted On Thursday, 28 March 2024 00:00

Once you finally submit your application to your lender, the wheels really begin to turn. On your end not so much but certainly so at the mortgage company. Prior to your submission though, your loan officer sent you a ist of the things you’ll need to have to accompany your application, things like paycheck stubs, bank statements and so on. Once you follow through with this, you can hand over the keys to the lender and let them start to work. However, certain things you might do after loan submission might very well derail or at least delay your loan approval. 

Don’t apply for new credit. When lenders first review your credit report, they’ll pull a credit report or at minimum request your credit scores. That’s to be expected. But sit on your hands for a while until your loan reaches the finish line. On a credit report, if you decide you want a new department store card, that new inquiry will show up on your report. Even if you decide not to move forward and take out the new card It will still show up. 

All the lender sees is the inquiry, it doesn’t see whether or not you actually took the new card. The lender then will stop and ask you about this. Have you taken out a new card? Have you used it? What’s the balance and what are your minimum monthly payments? This will stop everything, so don’t do it. Later, maybe, but not while your loan is in processing.

Don’t switch jobs. Even if you’ve found a better paying job which would then lower your debt ratios, your new lender wants to see 30 days of paycheck stubs. You’ll have to wait at least 30 days and most companies hold back your first paycheck for a couple of weeks. That’s a six week delay right there. If you’ve got a better paying job lined up, that’s great, but don’t go anywhere. Tell your future employer what’s going on and you can’t start right away. Your lender will understand completely because they too know about the 30 day and two week delay period.

Don’t make any unsourced deposits into your bank account. If you for example get paid on the 1st and 15th, that’s your regular pay. But if suddenly out of nowhere a random deposit shows up your lender wants to know where it came from. Is it a loan? Is it a financial gift? 

Lenders need to have all credit documents in the file be less than 30 days old, so before your loan gets to the settlement table, the lender will pull an updated credit report and maybe throw in some updated bank statements as well. Remember, your lender initially pre-approved you upon application, don’t change anything. Just sit tight until you get the ‘all clear’ signal from your mortgage company.

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David Reed

David Reed (Austin, TX) is the author of Mortgages 101, Mortgage Confidential, Your Successful Career as a Mortgage Broker , The Real Estate Investor's Guide to Financing, Your Guide to VA Loans and Decoding the New Mortgage Market. As a Senior Loan Officer and Mortgage Executive he closed more than 2,000 mortgage loans over the course of more than 20 years in commercial and residential mortgage lending. 

He has appeared on CNN, CNBC, Fox Business, Fox and Friends and the Today In New York show. His advice has appeared in the New York Times, Parade Magazine, Washington Post and Kiplinger's as well as in newspapers and magazines throughout the country. 

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