How to keep your loan approved – Credit

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Wrapping up a three-part series on ways to avoid causing a loan that is approved to be delayed or even denied. One thing to remember as this series comes to an end is that any of these nine examples can cause a loan closing to be delayed or denied AFTER the loan has been approved through underwriting.

How can this be? The loan approval is based upon the information provided to the underwriter. If the parameters change in income, assets, or credit, then the file must be reviewed again (delay closing). Depending on the change, the borrower may no longer qualify causing the approved loan to now be denied.

We’ve talked about income and assets. Today, we’ll finish with credit.

  • Don’t forget to pay your bills on time: I know, this should be obvious, but you’d be surprised. This one seems about as obvious as not quitting your job” from the first post in this series. A borrower’s credit will be pulled again right before closing. If bills were not paid, the credit score could be impacted. At a minimum, this would cause the file to go back to underwriting. If the score is now too low, then the loan could be denied.
  • Don’t buy a car OR trade up on a lease: I’ve had clients get approved for a loan, and then decide to buy a car because they think the mortgage loan is “out of the way.” The loan isn’t approved until it is closed. If a new payment is found, then the file will need to go back to underwriting causing a delay in the closing. If the payment is now too much on a monthly basis with the new home, the car purchase could cause you to no longer qualify to buy the home.
  • Don’t have anyone pull your credit once the loan process begins: This is how underwriting will find out if a car is purchased OR a credit line is opened to buy appliances or furniture. When credit is pulled, the pull is immediately filed under the “inquiries” section of the credit report. The new car payment, appliance payment, furniture payment, etc. won’t be on the credit report yet, but the inquiry is definitely there. When credit is pulled by underwriting on the day of closing, and sees a new inquiry, this inquiry will need to be addressed. If no credit was extended, then closing simply gets delayed. If credit was extended, then the loan goes back to underwriting. Again, depending on the amount of the new payment, it could cause you to no longer qualify on the home loan.

Looking to buy a home, but are also in need of a car? I get it. Life happens. Sometimes you need a car and a home. In my almost 10 years of closing home loans, this scenario happened several times. Contact me today if you are buying in the state of Georgia. I’ll make sure you know how to proceed if you are in need of buying a car and a home at the same time.

With all of these points about actions to avoid, it will hopefully cut out unexpected failures and get you into your new home on time and stress free!

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