As a Realtor, when I meet with first-time buyers, we discuss what they need to do – get pre-approved for a mortgage, evaluate priorities, sometimes save money. And we go over what they MUST NOT DO. We’ve created a tongue-in-cheek set of commandments, things like “Thou shalt not become self-employed, change jobs or quit your job.”
Most buyers sort of laugh at this. I’ve never had a buyer actually do something like that. But I have to believe that not every Realtor covers this information with their buyers because this week we had not one but two buyers break the commandments on our listing, sending the loan approvals into a downward spiral. One buyer apparently thought he could still getting a loan after taking a leave of absence, suing his employer and then quitting a job.
And with many buyers purchasing short sales (sometimes a long” process), there’s enough time that buyers’ financial situation can change dramatically from the time of pre-approval to the time of final underwriting. Some situations – devastating illness, death of a spouse – are unpreventable. Others are definitely in the buyers’ control.
Here are the 10 commandments for getting a mortgage:
- Don’t buy or lease a new car or you may find yourself living in it
- Don’t quit your job to change industries or start a new company
- Don’t switch from a salaried job to a heavily-commissioned job or 1099 independent contractor position
- Don’t transfer large sums of money between bank accounts. If you need to do so, check with your loan officer to ensure what kind of documentation will be required BEFORE you make the transfer
- Don’t forget to pay your bills — even the ones in dispute
- Don’t open new credit cards — even if you’re getting 20% off. (And yes the offers at some of the department stores are tempting but resist the temptation!)
- Don’t make big purchases on the existing credit cards. The time to buy the new furniture and appliances on credit is AFTER you own the home, not before
- Don’t close any credit card accounts. This may change your ratios, which help determine how much mortgage you qualify for
- Don’t accept a cash gift without filing the proper “gift” paperwork. Ask your lender what documentation is required.
- Don’t make random, undocumented deposits into your bank account
If circumstances dictate that you might need to engage in some of these behaviors, always talk to your loan officer first. And then follow their advice. If you need a referral to a good loan officer who can help you through the process, I’d be happy to provide one.