The DOs and DON’Ts During the Loan Process

Last Updated on March 27, 2021 by Kathy Rukat Smith

Buying a house (especially your FIRST house) is a fun, exciting and stressful time. My job and your lender’s job is to help guide you through the process and make the buying process less stressful. Learn about the DOs and DON’Ts during the loan process…

What to DO During the Loan Process

• DO pay your bills on time. Credit scores are very important when purchasing a home. You do not want anything to negatively effect your credit score.
• DO continue to pay your rent payments if you are renting. Your rent payments will need to be verified.
• DO stay in touch with your lender and your real estate agent. During the loan process, timing is critical. Answer all questions from your lender and your agent as soon as you can. Also, if you will be unavailable for some time during the loan process, let your lender and real estate agent know.
• DO be aware of re-verifications. Right at closing (and sometimes the day of closing), your credit score and employment will be re-verified by your lender. If you have a no inquiry on your credit, and explanation and verification will need to be documented.
• DO provide all documents to your lender ASAP. It is best to supply these documents within a day or two of your offer being accepted. Financial statements also have a shelf life. Do not be surprised if your lender requires you to send an updated paystub or bank statements as you go through the loan process. The following documents will be needed (and other documents may be required as you go through the loan process)…
  • Paystubs – Provide 30 days of paystubs for all jobs.
  • W2s – Provide W2s for the last two years for all borrowers.
  • Federal Tax Returns – Provide all pages and all schedules for all borrowers for the past two years.
  • Bank Statements – Provide all pages (even the ones left intentionally blank) of bank statements for all accounts for all borrowers. You cannot provide a screenshot of the statement. The bank statements must include your name, address and account number.
  • Child or Spousal Support – Provide the ratified agreements showing any child or spousal support if this is applicable.
  • Mortgage Statements – Provide mortgage statements for all properties owned, if applicable.

What to NOT DO During the Loan Process

• DON’T apply for new credit. Most home buyers apply for store credit cards to buy furniture or appliances for the new house. The additional debt could change your credit score and your debt-to-income ratios. You may not be able to qualify for your loan anymore.
• DON’T co-sign on a loan for anyone. Co-signing can decrease your credit score and you may not be able to qualify for your loan.
• DON’T change jobs. If you change jobs, you will have to wait until you have 30 days of paystubs before you will be able to close on your loan.
• DON’T be surprised if your lender asked for updated documents or additional documents. Bank statements and paystubs may need to be updated. Also, it may seem like your lender is asking for the same information you already provided. Because mortgage fraud is increasing these days, the lending industry is heavily regulated and some of those new regulations seem excessive.
• DON’T make any large deposits to your checking account. All large deposits (other than your regular pay) must be verified and have a paper trail. Never deposit cash without talking to your lender first. (For example, if you grandmother gave you $200 for your birthday, do not deposit the check or cash into your account.)
• DON’T change bank accounts. All money transfers have to be documented.
• DON’T deposit any gift funds into your account without first talking to your lender. Gift funds have a strict protocol that has to be followed.

Following the “DOs and DON’Ts” during the loan process will help make your loan and closing process go much smoother! If you have any questions about the loan process or the home buying process, feel free to give me a call at 843-267-2710.

“Helping You Find the Sandcastle of Your Dreams!”