We could all use a little comedy considering the recent rise in rates. But delays in the loan process are no laughing matter, costing you more and more as rates rise (even if you lock your rate, extensions are more expensive in this environment). With that in mind, here’s the second installment of “do’s and don’t’s” for prospective borrowers embarking on, or already engaged in the home mortgage process. In case it needs to be said, the “don’t’s” are strictly for comedy (though most are based on real world examples of things that will kill or greatly delay the mortgage process). The “do’s,” one the other hand, are potentially valuable nuggets of information that may greatly benefit your mortgage experience. In fact, most of them can end up making a difference in the success or failure of a loan, and at the very least, can help avoid costly delays. Above all else, remember that your loan originator wants to close your loan as quickly and as efficiently as you and the good ones fully appreciate that their borrowers’ satisfaction plays a huge role in their long term success.
Do: Fully inform your loan officer of any business losses or other tax situations that impact your income.
Don’t: Ask your loan officer if he would like to invest in your Ponzi scheme, er, “investment club” and earn 10% guaranteed return monthly.
Do: Get a survey done to be sure of the exact boundaries of the yard on your new home.
Don’t: Move the surveyor’s stakes 2 feet into your neighbors’ lots to maximize the space available for your new pool.
Do: Show the appraiser invoices for any major upgrades you’ve performed on your home.
Don’t: Expect a significant pricing adjustment on your appraisal for adding three bushes and a new mailbox.
Do: Tell your loan officer if you are buying a home from a relative.
Don’t: “Forget” to mention the three rental homes you own free and clear.
Do: Inform your lender if the home you’re buying is for your vacation use only.
Don’t: Tell him the duplex you’re buying nine blocks from your current residence is for vacation use only.
Do: Use your existing credit judiciously during the loan process unless instructed otherwise.
Don’t: Open 3 new charge accounts during the loan process to save 10% on curtains, bath towels, and throw rugs for your new home.
Do: Ask your neighbors, family, and coworkers for referrals to lenders they had great experiences with.
Don’t: Use your boss’s nephew for your loan because “he’s just starting out and needs the business.”
Do: Understand that loan terms vary by credit score, equity, loan purpose, property type, loan size, tax/insurance escrows, property state, and lock period.
Don’t: Expect to get the same rate your friend with an 820 credit score got two months ago when your score is 609 and rates went up 1% in the interim.
Do: Ask your loan officer for recommendations on agents he has worked with and knows do a great job.
Don’t: Ask your loan officer if you can use your ex-brother-in-law, who lives out of state and last had a real estate license four years ago, as your agent.
Do: Ask if and when your loan will be transferred to a different servicer after closing.
Don’t: Expect that your current servicer will automatically give you a great deal on a refinance solely because you’re currently paying them 5.75%.