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Taking the mystery out of the mortgage approval process

After searching for that perfect home, making an offer, and applying for a mortgage, you’re ready to move in … and wish it could happen right away.

 

Just like waiting for your perfect job offer or a new baby to arrive, it can be hard to wait for the keys to your new home — especially since getting mortgage approval is the most passive part of the homebuying process.

We’re hard at work for you!

In today’s “instant everything” world, we’re accustomed to getting immediate answers and same-day delivery. We realize it’s stressful to wait, so we wanted to assure you that things are happening behind the scenes.

 

After you’ve submitted your mortgage application and all of the needed documentation, your loan will go through the underwriting process. Even if you’ve had preliminary verification of assets, income and other information, underwriting is the final step toward loan approval. Here’s what the underwriting team is doing while you’re waiting by the phone:

 

  • Verifying assets to make sure they’re all still in your name and available.
  • Confirming income and employment based on W-2s, pay stubs, and bank accounts. The team typically reaches out to your employer for confirmation.
  • If you’re self-employed, verifying income requires different information such as K-1 (partner earnings and losses), balance sheets, personal tax returns, business tax returns, and other supporting information. This can take a bit longer to verify and evaluate than with standard W-2 income for employees.
  • Getting an appraisal of your home to ensure that you’re paying a fair market price, which provides the lender with an assurance that their loan risk is appropriate.
  • Reviewing your credit history, looking at your debt-to-income (DTI) ratio, your credit score, how you’ve handled loans in the past, and more.

 

Like other businesses, speed can be affected by a variety of things that are out of our control, such as holidays, waiting for responses from employers or appraisers, and other little speed bumps. It doesn’t mean anything is wrong; it’s simply a reflection of today’s hot real estate market.

 

At this stage of the process, it’s easy to get excited about next steps and ride the rush of adrenaline to make other big decisions. This can have a negative effect on your loan’s approval. Please avoid doing any of these things after you’ve submitted your mortgage application:

 

  • Buying a car, purchasing furniture or making other big expenditures. If you pay cash for these items, it will reduce your assets. If you use credit, it can affect your credit score.
  • Don’t apply for any new loans. It’s easy to say “yes” when a department store offers a discount if you get their charge card. Even if you don’t plan to USE the credit card, it still shows up as an inquiry on your credit report, which can have a negative impact on your score.
  • Don’t close old credit accounts. Those $0 balance accounts contribute to a healthier amount of available credit.
  • Don’t shift money from account to account, unless your lender indicates that you should for liquidity purposes or other legitimate reason. If you do this, keep a detailed “paper” trail (electronic documentation works too).
  • Don’t quit your job. Enough said.

 

While you’re waiting for mortgage approval, there are several things you should do:

 

  • Reply promptly to any questions from your lender.
  • Contact your lender right away if anything major changes in your financial situation, so they can be proactive about any potential problems.
  • Avoid fraud by making sure that any request is truly from your mortgage provider. Wire fraud scams are being reported with con artists sending an “URGENT” email instructing you to wire money for closing costs. If in doubt, call your lender.
  • Keep yourself busy if you find yourself obsessing over your impending approval. This can be the perfect time to catch up on your favorite bingeworthy shows, get back into an exercise routine, or dig into that book you’ve been wanting to read.

 

This is an exciting time in your life and we’re thankful to be a part of it! We’ll work diligently to move your mortgage through the underwriting process as efficiently as possible, so you can start the next chapter of your life in your new home sooner.

 

If you have questions about the underwriting process, don’t hesitate to reach out — we love to help make homeownership dreams come true!


- Dec 12, 2021



 
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