Beware of the rules of Lending, 12 of 12 What You Can Actually Do!

Let’s look at the very short and sweet ‘DO’ list:    Mainly…DO use your head…

DO KEEP MAKING YOUR PAYMENTS ON TIME—make all of your debt obligations on time and don’t miss any of them!

If a 30 day late from ANY of your accounts shows up at the end of the loan process, you may be denied the loan. That would be sad, so pay attention to the details while you are going through the loan process and all will be well

DO CONTACT ELISE GROVES NOW with ANY QUESTIONS if you’re not sure what to do.  I will guide you through the minefield and make sure you have a smooth and successful loan closing!!

Very nice!!! 

If you enjoyed this post please click here ‘Beware of the rules of Lending’  to see all 12!

Beware of the rules of Lending, 11 of 12 Buying New Stuff

DON’T BUY A CAR, FURNITURE, APPLIANCES, OR ANYTHING BIG!  Don’t think that the lender won’t find out…they have numerous ways to check on you during the mortgage loan process by accessing different databases of information.

It’s not really a matter of IF they check but WHEN.

If you go on a spending spree then guess what is going to happen next?

You could be at risk for no longer qualifying for the loan, losing your earnest money deposit as well as the home you wanted to buy.

LAY LOW… don’t spend ANY extra money, or charge ANYTHING new!!

I know you’re excited to start furnishing your new home and getting things lined up, like ordering carpet and flooring, or applying for new credit but wait.

If you simply can’t wait and the deal is just too good (yes we have had that happen) Please make the smart decision and contact us before making the purchase to that we can get all of the information that we need in order to keep the deal on track.

This will not be the last time the washer and dryer are on sale.  Trust me.

Beware of the rules of Lending, 10 of 12 Deposits

DON’T MAKE UNUSUAL DEPOSITS—That includes CASH. Be prepared to furnish COPIES of every deposit you make that isn’t a regular direct deposit of a paycheck or benefits.

Seriously…copies of your birthday check from your Grandmother are suspected as money laundering these days, so keep copies of everything!!  Try NOT to put cash in the bank, or move other funds around during the loan process.

Usually any deposit made of over $300 that can not be immediately paper trailed will cause problems… for all the underwriter knows you are a drug dealer and this was your latest haul…

It just really irritates the underwriter, and it will NOT be counted toward making sure you have enough funds in the end.  Weird but true… you would think it would be the opposite since ‘cash is king’, but not in this case. 

If you can already show the lender you have enough for the down and closing costs, just keep the cash in your pocket and save us all a headache of trying the explain those cash deposits.  PLEASE  KEEP YOUR DEPOSIT SLIPS/RECEIPTS! Underwriters watch bank statements like hawks and they want to know exactly what’s going in and out of your accounts and ‘why’ so just be prepared to back it up with explanations and actual proof.

Beware of the rules of Lending, 9 of 12 Co-Signing

DON’T CO-SIGN ON ANOTHER PERSONS LOAN— Whatever you do, don’t get talked into helping your kids, your in-laws or ANYONE else with getting financing that they can’t get on their own right now.

The underwriter is going to most likely count the new debt in against YOU, even though someone else might be making the payments.

A good rule to remember with Co-Signing is that you have to prove the other party has been making the payments on their own for at least 12 months… yes an entire year… so is that new car, TV, or whatever else really worth it right this second?

Trust me, whoever you are trying to help can wait until YOU are done with your loan transaction.

If you have already Co-Signed for someone that requested help, good on you for helping them out. Now since the debt is reporting when we run credit, (again assuming it has been 12 months) you will also need to produce all of the cancelled payment slips or checks to support the fact that you have not been making the payments or even been helping, not even a little bit… if we can paper trail it, you are helping. Note- In most cases this excludes Co-Signed student loans in deferment.

This could end your chances immediately of getting your own home loan, so just WAIT.

If you are thinking about Refinancing or Purchasing but have Co-Signing questions please CONTACT US so we can help you with a smooth transaction.

Beware of the rules of Lending, 8 of 12 Paying off Debt

DON’T PAY OFF COLLECTION ACCOUNTS OR CLOSE CREDIT CARDS -

The horrors that  this can create are not pretty.

I know it may seem like the right thing to do, but this falls under the category of ’No Good Deed Goes Unpunished’.  You can actually DROP your credit score substantially by paying off a small collection account or closing a long standing account.

Credit is one of the most valuable and tricky financial tools that we deal with. STOP, ASK ME FIRST before you do anything like this!!!   There are very specific ways this has to be done.

Beware of the rules of Lending, 7 of 12 Marriage

DON’T CHANGE YOUR MARITAL STATUS- You have waited this long, so just hang on a little bit longer and don’t start that divorce filing quite yet.  If you do, be prepared to jump through hoops of fire… it is possible to complete a purchase or refinance transaction during a separation, but please be sure you CONTACT ME IMMEDIATELY so that we can sit down and set up a game plan to make things easier on everyone.

California is a community property state, so your new, or soon to be ex-spouse, will HAVE to sign off on your new purchase or refinance.  Try to remain amiable during the process if you are unfortunately going through a separation or divorce.

Many lending rules are affected by legal separations and divorce proceedings, so beware.

If you have recently married within the past year, congratulations!  Be sure you furnish a copy of the Marriage Certificate and possibly an updated social security card if any last names have been altered.

Beware of the rules of Lending, 6 of 12 Maxing Out

DON’T MAX OUT OR OVERCHARGE CREDIT CARDS— One of the quickest ways to destroy your chances of getting your home loan is to go on a spending spree during the loan process. Remember we covered that this also includes just applying for new credit, another DON’T.

If you max out your credit cards, or even worse, go over the limit, it can instantly drop your credit score.

Try to keep your credit card balances BELOW 30% of the available credit limit.  Your credit score will love you for it.

Does all of this sound foreign? Are you used to living on the edge of your credit? Have you always had dreams of home ownership but thought that your credit wasn’t good enough?

Please contact us at the Groves-Team and we can get you back on track to owning your own home!

Beware of the rules of Lending, 5 of 12 Overdrafting

DON’T OVERDRAFT — I’m not talking about drafting Ryan Tannehill with the 8th overall pick either. Let’s talk about nasty little subject that we call BTDs or Bank Transmitted Diseases. As much as we don’t want to admit, we have all gotten lazy, had 1 too many drinks at the bar… BAM! The next morning you check your account and there is a fresh overdraft… Before you know it, you have shamed yourself into transferring money from your savings or other banks to cover it up… a real downward spiral, but I digress.

Mel Kiper Jr. Hates Over drafting!!

During the loan process is NOT the time to miscalculate how much money you have in your account and use your overdraft protection (OP). The underwriter does NOT look kindly on people who can’t balance their checking account.  You’re trying to convince the lender that you are a low credit risk and worthy of borrowing hundreds of thousands of dollars and paying it back on time.

Imagine how the underwriter would view your ability to manage your money if that $5 foot long from Subway showed up under OVERDRAFT PROTECTION. Worse yet, your checking account statement shows you have a history of using your OP in months past, and might even give a dollar amount that you have racked up in those fees.  That alone could deny you the loan, please practice safe banking and protect yourself.

Beware of the rules of Lending, 4 of 12 Shredding

DON’T SHRED YOUR PAY-STUBS & BANK STATEMENTS— I run into clients all the time who get their bank statements and pay-stubs in the mail, then they verify the information and balance their own accounts, and promptly shred the statements. There is absolutely nothing wrong with this… unless you are in the process of getting a mortgage!

Please hang on to them during the entire loan process. The underwriter is going to want at least one actual bank statement and 30 days worth of pay stubs, so keep them on hand.

But wait, I can hear it now,”Elise I don’t get paper statements or pay-stubs in the mail ever since I opted for E-Statements” well good for you… I hope you know how to print and scan or email those to us, and if you don’t you better learn fast.

Kidding aside, we all work in an electronically dominated world now a days and it is very important to be able to protect ourselves from identity theft. The Groves Team takes any and all sensitive material seriously and have all non-record keeping papers shredded after the completion of your deal.

Beware of the rules of Lending, 3 of 12 New Credit

DON’T APPLY FOR ANY NEW CREDIT—Resist that new set of knives or the 15% discount you will get if you open a new account!! The lender will refresh your credit report right before they fund the loan and Lord help you if new credit inquiries show up on that report! 

You are going to have to jump through hoop after hoop to convince the lender you didn’t just take on a whole new monthly debt that will disqualify you. Even if you are well qualified the lender will want to know why you are trying to aquire new credit durring perhaps the largest financial process of your life.

Just wait…. It’s the credit inquiry that could kill your deal, so stay out of Best Buy, Home Depot and the car dealers’ showroom please… IT’s A TRAP!!!