Buying a new home will be one of the most exciting times of your life. On the other hand, obtaining the loan to buy your dream home may hold many anxious moments. A prequalification is just the first step in a series of reviews that gets you to the closing table. The actual approval of the loan comes from Underwriting and it’s there that even the most capable loan officer may see their match.
Most buyers base their ability to buy on Credit Score. While this is a very important part of buying, Credit scores are just one of many review items for the Lender to undertake before they approve a loan. So when you think you’re all set to go after giving up endless supplies of personal documents, there may still be things that pop up after the loan officer hands your file over.
I’ve compiled a list of situations that came up during the many closings I’ve had over the years. Here are some of the standout loan issues that I faced as both a Buyer’s agent and Listing agent that needed quick actions to help move the loan review through the Underwriting stage:
New Job: Being at a job for a certain amount of time is part of the loan review. Lenders may do an employment verification before the loan can be approved. A change in jobs can throw off the review as they compare the pay information against the employment verification. Best solution: Let your Lender know upfront about any potential job changes. AND ask your new employer to respond quickly to your Lender’s request for verification.
Own a Rental: It’s important to ask your Lender what documents are needed IF part of how you qualify for a loan is based on properties you currently own and rent out. So in other words, your rental income is what you need to qualify for that loan on top of your salary. Fannie Mae guidelines may require specific tax schedules to further the review.
Past Short Sales or BK: This may not be a topic you want to bring up to your Lender but it is important to know that 1) this may affect the timing of a loan approval and 2) will be discovered somewhere in the loan process if you had a short sale or BK in the last couple of years. Better to disclose early to allow your fantastic loan officer to find solutions rather than being caught off guard after all the hard work you’ve put in.
Adding new toy(s): We’re all excited about the new house and you may have held off buying anything new until you find that house of your dreams. The lenders are looking at your debts right away to see if you can qualify with the money you make. The bad news happens if the loan is right on the cusp of qualifying and you add more debt OR you take our money to buy that new toy, furniture, etc.. Hold off any major buys till you get the keys. Those numbers on your paperwork are so important to the review stage that by changing it (even just a little) may create an unwanted delay.
While these are the main doozies that can cause hiccups to the loan process, there are some that are not as common but yet can create a snag. Having a good understanding of how the process works and a partner in Real Estate that can keep the ball rolling will get those keys into your hands quicker so you can enjoy your first night your new home!