From the outside looking in, getting a mortgage loan from application to the closing table looks fairly straightforward. You apply for a loan, submit it, the lender looks at it, approves it then orders closing papers. Once you submit your application, it gets pretty quiet on your end. But on the other end, there’s a whole lot going on. In fact, if there is a lot of work to do on your end at the very beginning, it might indicate there were some problems with the application or some issues with third parties. You want it to be quiet on your front. That indicates your loan is being processed without any road bumps. To help with a smooth closing, there are some things you can do on your own that will definitely help.
The first thing you can do is make sure the application you submit is complete. Don’t leave anything out and decide you’ll fill it in later. Submitting an incomplete loan application essentially means you haven’t completed one at all. A loan with missing important data just sits on the loan processor’s desk. When the loan is submitted, one of the first things done is reviewing the application making sure critical data is included. Your name, where you’ve lived the past two years, income and assets are all very important. If anything is missing, you’ll be contacted for that information to get the loan in process. Yes, there will be some areas on the application that you don’t yet know, such as the property address of a home you’ll soon buy or the exact amount of money in a checking account, just make sure you complete the application the best you can.
When we first talk, you’ll be provided with a list of items needed to compliment your application. You’ll be asked to provide your most recent paycheck stubs that cover a 30 day period. We use this information to calculate your gross monthly income and for qualifying. And because most loan programs ask that you have at least two years of employment documented, the last two years of W2 forms will be required. Your most recent bank statements providing verification there are sufficient funds to close a transaction will be needed. If you’re self-employed or you receive more than 25% of your monthly income from bonuses or commissions, you’ll need to provide copies of the last two years of your federal income tax returns. If you have this information ready when you submit your loan application, this will go toward a smooth process.
This third task is really not doing something compared to doing something. After you submit and document your loan, don’t apply for anymore credit. Just sit tight. If you’re really looking forward to buying that new car, have some patience and wait until after your loan has closed. This helps in a couple of ways. First, lenders will run one final credit report prior to funding your loan. This makes sure the debt you disclose on your application and appears on your initial credit report essentially matches the final report. If a new payment shows up, your loan must be reviewed yet again to make sure the debt ratios fall in line. Second, a new credit inquiry while your loan is in process can affect credit scores. Most loan programs today require a minimum score and it’s possible a new inquiry while you’re shopping for a home could negatively impact your qualifying credit score.
Four, don’t make any changes as it relates to your employment. Even if you’ve been offered a new job at a different company for more money, don’t make any moves. If you want that new job, again you should wait until after you close. Remember that you had to submit your most recent paycheck stubs when you first applied? If you switch employers midstream, it will take more time to get your new paycheck stubs from your new employer. If you do switch, the process gets bogged down with more time and more documentation.
Finally, if after you’ve submitted and documented your file, there may be more questions. These questions are referred to as loan conditions. Typically, all they’re concerned with is updating credit documents such as providing updated paycheck stubs or bank statements. There might be a question about a bank deposit that can’t be properly sourced. Whatever the question, act quickly. Any delays on your part will only delay your loan approval.
If you follow these five things on your own, your loan process will be very quiet on your end after all.