When buying a home, there are two stages in the home loan approval process.Stage 1 starts when a homebuyer submits a mortgage application to his loan officer for a pre-approval.
When pre-approval is requested, it will be a preliminary home mortgage approval indicating that the mortgage will likely be approved for a certain down payment and purchase price.
This preliminary approval becomes obsolete once the buyer signs a purchase agreement. Stage 1 is now over because the buyer must now secure the actual loan from an “underwriter” and not the loan officer.
It is the job of the “underwriter” to make sure that the buyer can meet the lending criteria of the banking institution. He does this by reviewing the buyer’s credit, assets, income, job history and other factors. This is Stage 2.
If the loan officer did his job in Stage 1, Stage 2 is just a formality. And most times, it all goes according to plan. Occasionally, though, a homebuyer sabotages his own mortgage approval by inadvertently changing his “risk profile”. It doesn’t happen on purpose, of course — it just happens.
It is important for the buyer to maintain a consistent “risk profile”. The following is the “DO NOT DO” list of 6 activities for a buyer to avoid during the period between Stage 1 and Stage 2 of the mortgage loan process:
1. Don ‘t miss a payment to a creditor 2. Don’t transfer large amounts of money in or out of your bank accounts (large may have different meanings to different people) 3. Don ‘t accept gift of cash without talking with your loan officer first (There are rules for gifts) 4. Don’t buy a new car (or increase loan or lease payment) 5. Don ‘t quit your job or change career(don’t switch to a “commission” job ) 6. Don ‘t open a new credit card (no matter the deal)
This is the basic starter list of things not to do. You may still make some errors, but talk to your loan officer if you have concerns or need to break a “rule.” There can be “glitches.” throughout the mortgage loan process. Therefore, keep the lines of communication open between you and your loan officer.