Tips for making it easier
to get your home loan approved
By JEFF LAZERSON / CONTRIBUTING COLUMNIST
It’s time to review borrower best practices for your aggravation-free (just kidding – how about minimal aggravation) loan approval and funding as borrowers are sniffing out better terms on their existing mortgages and the purchase market is on fire again.
This week I took a survey in my office and from some of my lender partners regarding common problems that get well qualified borrowers delayed or denied. Consider the following:
1) Your loan officer must run your credit report right up-front. Those euphoric consumer credit reports showing your middle score is off the charts are no good to us. For QC purposes (quality control for you non-Tweeters) and for industry standards, we are required to pull a residential mortgage credit report, or RMCR.
2) Underwriting guidelines forbid large cash deposits, say larger than a paycheck. You are automatically considered guilty of having a straw buyer or having borrowed your down payment funds when this comes up. If you have cash on hand, then put it into your bank account three months before you apply for a loan. We ask for the last two months bank statements.
3) Do not transfer money around multiple bank accounts in the two months prior to your loan application or during the time the lender has to verify your funds needed to close. Money has to be tracked and paper trailed. This drives loan processors crazy.
4) Refinance after your home improvement projects are done or before you want to start the project. The appraiser has to inspect and photograph your home inside and out. Loans can’t be funded until your home is in order.
5) Lenders monitor your credit from the day you apply for the mortgage until the loan is funded. Do not apply for new credit, be it a car loan or furniture for your new home or anything else. This slows the approval process down or worse yet, could knock you out of the approved loan qualification box.
6) Listen to your loan officer. You are not smarter than him or her when it comes to maneuvering through the mortgage maze. My industry enjoys some of the most asinine rules in the history of the world. Don’t argue. Don’t get stubborn. Take a chill pill if need be. Sometimes that helps.
7) Responding rapidly. Do not procrastinate. Acknowledge those electronic disclosures as soon as you can. Quickly call the appraiser back to schedule the inspection appointment. Get the loan processor what he or she needs – now.
8) If you are purchasing, shop for the settlement service providers ahead of time and add your choices to the purchase contract. You are paying for this, not the listing agent. It’s commonplace that the prices are higher and the service is terrible when using your agent’s referal because of a financial tie between the listing realty company and the escrow/title company.
9) Make sure your water heater is double strapped and your fire alarm and CO2 alarm are in order ahead of the appraisal inspection.
10) Do not change jobs in the middle of your home purchase or refinance process.
Jeff Lazerson - Mortgage Columnist since 2011