Home > Blogs > Texas > Bexar County > San Antonio > First-Time Homebuyers: What To Do and NOT to Do During the Loan Process
1,232 views

Dianne Y. Ayala Steffey, MBA, CLU, ChFC, NMLS #267658's Blog

By Dianne Y. Ayala Steffey, MBA, CLU, ChFC, NMLS #267658 | Mortgage Broker
or Lender in San Antonio, TX

First-Time Homebuyers: What To Do and NOT to Do During the Loan Process

As a mortgage broker for 15 years, I have learned NOT to assume that my clients will know what to do; more importantly, what NOT to do, once they begin the loan process with me. Unfortunately, this has been a result of some very hard lessons learned. 

 

DO’S AND DON’TS

 

1. Pre-Approval/Conditional Loan Approval: This is not a full loan approval. It still has to be fully underwritten by an actual Underwriter. Even if your loan officer runs your loan through an Automated Underwriting System, such as DU or LP, this is not a full approval. At this point, DO NOT TAKE IT TO THE BANK. I don’t care how much your loan officer says it’s a sure thing.

 

2. Do Continue to Pay All Your Bills On Time: This includes all of your revolving and installment debt. Just because you received a pre-approval, this does not mean that you are no longer obligated to pay your debts. This includes your rent, mortgage, and any or all other debts.

 

3. Do Not Give Your 30-day Notice to Your Landlord: Wait to get your full loan approval, or what we call in the business, Clear-to-Close (CTC). When you have received this from your loan officer, then you can give your 30-day notice. I have seen too often where Borrowers are told by their loan officers to give notice very early in the process only to be "left out on the street" due to a Denial of their loan.

 

4. Do Not Open Up a New Credit Card: An inquiry to your credit report may hurt your credit scores, especially if your credit scores are on the border.

 

There are credit cards that you can open up that do not cause an inquiry on your credit report.

 

5. Do Not Close Any Credit Card Accounts: This will cause a negative impact to your credit scores. This is because you have reduced the amount of buying capacity with your credit cards.

 

For Example: if you closed a Visa card with a $1K limit and you had a total of $3K in credit card capacity, you will have reduced your total charging power by 33% or to a total maximum credit card limit of only $2K.

 

The buying capacity accounts for 30% of your credit scores.

 

6.  Do Not Buy Any Furniture or Major Purchases: Don’t even think about shopping for any furniture or appliances, even if it’s on sale. Get that after the loan closes and funds.

 

True story: A client of mine (attorney) was ready to close on his house only to find out that he opened three (not one) furniture store accounts. The lender had pulled his credit report prior to ordering docs, and his scores dropped 100 points! Unbelievable!

 

7. Do Not Get a New Cell Phone: Believe it or not, cell phone companies will pull your credit.

 

For example: I recently had a client who recently applied for an iPhone only to have her scores drop below the minimum credit score by six (6) points. At the time, we were working to raise her scores, and this just set her back two months from closing. iPhone…House…iPhone…House?

 

8. Do Not Let Your Loan Officer Pull Your Credit Multiple Times: Too often loan officers who think they understand the credit restoration/repair business will do more damage than good by pulling their client’s credit multiple times during a six-month period. It’s true that mortgage inquiries will only count as one inquiry if pulled within 45 days of each other. But, over a period of six months to a year is a very different story.

 

The best thing to do is to contact a reputable credit restoration/repair company that is an expert in this area. I have referred a number of my clients to www.640orfree.com/sanantonio who have experienced great success and are now in their new homes.

 

Also, you can check your credit at www.annualcreditreport.com without it adversely impacting your credit scores and without it causing an inquiry on your credit report. This is a good place to find out about your credit, and the first report is free.

 

9. Do Not Pay Off Collections: This may cause your collections to appear as a recent derogatory item, which will adversely impact your credit scores.

 

Remember, if the collection is older than two years, the lender most often times will not require you to pay it off, especially if it’s a medical account.

 

Only pay it if the loan approval requires it. Otherwise, do not touch it.

10.     Do File Your Income Taxes:  All lenders are ordering IRS transcripts from the IRS for years 2008 & 2009.  (2010 will not be required after April 15, 2011.) This is to 1.) verify that you have filed your income taxes, and 2.) verify the return that you have given the loan officer matches what has been filed with the IRS.

 

A non-filing of your income taxes will cause a HUGE delay in getting a clear-to-close on your loan. Generally, the wait is 8-12 weeks from the date of the income tax filing to the retrieval of the income tax transcripts. Plus, the wait at the IRS Office is ridiculously long, 3-4 hours. And, I personally speak from experience. Not fun!  


If you are buying a home and seeking financing, the bottom line is to not do anything that will adversely impact your credit scores. Be sure to contact your mortgage professional if you have any questions about anything that may affect your credit or the process in your loan. This person is one of your biggest advocate in this entire process.

All of us in the mortgage and real estate business want this to be one of the most exciting times in your lives. But, we realize that this can be one of those traumatic times, as well. Hopefully, this will help to alleviate some of the trauma witnessed in these transactions.


Dianne Y. Ayala Steffey, MBA, CLU, ChFC,  NMLS#267658
Your Personal Mortgage Consultant for Life!
Sterling Mortgage Services NMLS#373771
2929 Mossrock, Ste 222
San Antonio, TX 78230
210.349.2102
210.349.1544 fax
210.831.8749 cell
www.sterlingloans.biz

 




 

 

 

 

 

 

 

 

 

 

Comments

I could have added more items, such as:

11. Do Not change your job or profession; or, decide to become self-employed or unemployed
12. Do Not max out your creidt card by using your credit cards during this process.
13. Do Not co-sign for anyone during this process
14. Do Not make any changes to decrease your savings and checking accounts
15. Do Not buy a car

Follow the above guidelines along with these listed here and you will prevent any unnecessary delays in processing your home loan.


Dianne Y. Ayala Steffey, MBA, CLU, ChFC, NMLS#267658
Your Personal Mortgage Consultant for Life!
Sterling Mortgage Services NMLS#373771
2929 Mossrock, Ste 222
San Antonio, TX 78230
210.349.2102
210.349.1544 fax
210.831.8749 cell
http://www.sterlingloans.biz
By Allan Erps,  Thu Mar 17 2011, 20:25
Fantastic Post and just had one(thank goodness it closed today) who bought some furniture and other minor items. Held up closing for about a week!!
Thanks, Allan! I now have my clients sign a form at the beginning of the process that addresses all of these items. Unfortunately, I have experienced almost every one of the above items personally.

All the Best!

Dianne Y. Ayala Steffey, MBA, CLU, ChFC, NMLS#267658
Your Personal Mortgage Consultant for Life!
Sterling Mortgage Services NMLS#373771
2929 Mossrock, Ste 222
San Antonio, TX 78230
210.349.2102
210.349.1544 fax
210.831.8749 cell
http://www.sterlingloans.biz
By Allan Erps,  Thu Mar 17 2011, 20:40
You can add large deposits to savings or checking(red flags) as well!
That's an excellent point. This list is ever evolving! Thanks for the suggestion.
'
Dianne
By Randy Pereira,  Tue Mar 22 2011, 05:37
Nice Post Dianne, Thanks for sharing with us.
Randy, thanks for reading it and for your comment! Be sure to use it with your clients.

POST
 
Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer