The borrowers of JMAC’s brokers may know what to provide to be approved for a mortgage but are they aware of what not to do prior to the closing of the loan? Our brokers who have experienced any of the following missteps are all too aware of the consequences, potential denial of an otherwise previously approved loan.
JMAC’s experienced brokers tell borrowers that they should not change jobs, quit a job, or start a business. Steady employment and verifiable income are obvious requirements but any deviation from what was verified could at the very least require a letter of explanation, if not entirely disqualify the applicant.
Do not co-sign a loan or lease for anyone. This added debt may push the DTI beyond an allowable ratio. Speaking of DTI, our broker’s borrowers should not finance purchases like a car or a boat, nor should a new lease of any sort be added to the overall monthly debt. Borrowers also need to resist the urge to start buying furniture, appliances, and other household items until after the loan is closed.
Borrowers are told to not allow credit card balances to creep up and to not apply for new credit cards. Not only will either event change the DTI but all of these changes to credit will require an inquiry into that person's credit report. Each inquiry can reduce the credit score by up to 8 points. Borrowers may not realize that JMAC and other lenders pull an updated credit report just before closing to make sure everything is still within underwriting guidelines.
Borrowers shouldn’t make large bank deposits or transfers without full documentation and a "paper trail". Funds for down payment and closing costs will be sourced prior to closing. JMAC and others will require account statements for where the money was held before the house purchase. If down payment and closing money come from any source other than the borrower's regular paycheck and savings, letters of explanation are required.
The bottom line is this: top brokers tell their borrowers they should avoid doing anything that alters what they've already entered on the application and supported with documentation.