You often hear about things you can do to help with the home-buying process. But what are some things you should not do? As an underwriter for Bryant Bank, our job is to review the credit, income, assets, and collateral for each borrower to ensure he or she is an acceptable credit risk for the bank. We also look at fraud risk and check for compliance with guidelines from agencies, such as Fannie Mae, Freddie Mac, and VA.
Bryant Bankers have helped a lot of people through the home-buying process, and in doing so, have seen the good and the bad. With that comes knowledge. In this blog post, we will share eight things that you absolutely should not do if you are planning to buy a house in the near future, or if you are currently going through the process.
- Don’t hold back information. Some of the biggest red flags we see have to do with undisclosed debt or properties owned, fraudulent information, insufficient or partial documents provided, and self-employment that is not disclosed. Deposits made to bank accounts that cannot be sourced are a problem, as well as loans that have been co-signed but not disclosed. These can be significant and can disqualify you for your loan and/or create challenges in the loan process.
- Don’t make major changes to your job or income level. The mortgage process is much easier without recent changes to jobs and income. We should mention, however, that if a new job is a lateral move or move up, it may be acceptable depending on the type of income structure you have. But those who have variable income that involves commissions, bonuses, etc. should never make a big move since income is averaged over a two-year period. This average helps us establish an income pattern. But, with major variations, this is much more difficult.
- Don’t make large purchases. We recommend that borrowers do not make any large purchases or take out other loans. This could affect your loan qualification by increasing the debt-to-income ratio.
- Don’t take out multiple credit inquiries. This is not the time to apply for credit cards or buy a new car. Doing these things will mean that your credit is pulled, which can affect credit scores.
- Don’t skip the pre-qualification process. You should ALWAYS pre-qualify before purchasing a home to determine your credit rating, the amount and type of mortgage you can qualify for, approximate funds needed to close, and an estimated interest rate. Otherwise, you may contract for a home you cannot qualify for, which can be devastating if you find your dream home but cannot actually afford it.
- Don’t assume you are well-qualified. Some people think they do not need to provide the required documentation since they consider themselves to be “well qualified” with substantial assets, excellent credit, necessary income, etc. All borrowers are treated equally in the process, and everyone must provide the same documentation regardless of their credit standing.
- Don’t worry about security. Borrowers are sometimes reluctant to provide personal information, especially due to the recent increase in credit breaches. Rest assured that all information provided to Bryant Bank is confidential, and electronic transmissions are secure. The mortgage process is information and paperwork driven. How quickly you are able to provide the requested information will dictate the ease and speed of the process.
- Don’t be too anxious. The process of borrowing a large amount of money is intimidating to some people. Know that our loan officers are here to talk things through with you, to ease any fears, and make the process easier.
About any of these issues, feel free to speak with your Bryant Bank loan officer to discuss any changes, challenges, or hurdles that may hamper your loan qualification or the continuation of the process. They encourage questions and always keep open communication throughout the process.
Bryant Bank operates only in Alabama and was founded on the belief that the state needs a bank that is focused on the needs of Alabamians. Its goal is to help families get ahead, help businesses grow and make the community a better place to live. Click here to sign up for an account with us today.
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