People forget to tell us the craziest things when they are getting a mortgage these days. When applying for a loan, what you tell the lender in the beginning needs to match what you are doing at the end. In other words, you cannot start finagling your finances before you close. The banks scrutinize loan applications more than ever now and will shake you up all the way to the closing. So, moving money all over, closing accounts, borrowing money, ruining your credit and quitting your job are probably not good things to do right before a closing. Here are five things you cannot hide from your lender…
1. Large Deposits The lender will usually ask you for copies of the last two months bank statements to verify you have enough funds to close. If you have recently made a large deposit into your account, the lender will question the source of funds. So, be prepared to explain where the money came from. Gifts from family and loans from your retirement fund are probably okay, but wads of cash from the mattress are not.
2. You took a loan out again from your 401-K Of course you can borrow money from your retirement account to make a down payment or cover your closing costs. The amount you borrowed is considered an asset, but the monthly payment is now a liability and calculated into your monthly debt. Even though it doesn’t show up on your credit report, it will show on your paycheck, which of course the lender requires to see.
3. You have to pay child support or alimony This does not show up on your credit report, but will show up on your tax returns. If the lender requires a copy of your tax returns or requests a copy from the IRS (they can do this), they will see those write offs all over the place and now want to know more!
4. You lost your job the week before the closing The lender is going to call your place of employment within 48 hours of the closing to make sure you are still working. If they call and human resources said you are no longer there, bye bye mortgage.
5. You just leased a new car Buying or leasing a new car is fine as long as the payments are not too big and disqualify you for the loan amount. It is okay to get a new car before you close on your mortgage, but make sure you are not adding more to your debt than you had when you applied. The lender could run a new credit report right before the closing, and then they will have to re-qualify you with the new debt…and you might not qualify. Better to wait until after you close to lease that Maserati.
The point of the story is, you cannot hide from your lender. It is better to tell all upfront and don’t change a thing until after you close your mortgage. Non-disclose is going to cause everybody aggravation and wow if you can’t close….who are you going to blame? Don’t shoot the messenger, I’m just saying……