It is all too common for mortgage applicants to delay, or entirely forfeit, a loan by making mistakes during the application process. There are a few things you simply should not to after applying for your loan to make sure the process is as smooth, simple, and successful as possible.

To start the process, talk with me to initiate the pre-qualification process. Next, follow these tips for what not to do after applying for a mortgage.

1. Don’t make large cash deposits

This tip may seem counterintuitive. Wouldn’t more money in your account be a good thing? In some cases, sure, but if the increased account balance comes from a large cash deposit, the underwriters will be unable to determine what the source of the cash is.

If you need to deposit a large amount of cash, talk with your loan officer first to determine the best way to document the funds and avoid throwing a wrench in the escrow process.

2. Avoid large purchases on credit

Even if it is a practical purchase, and one your are confident you can afford, avoid making any large purchase on credit until closing on your loan. This includes opening new credit accounts to buy an appliance, purchasing new furniture on a credit card, buying a new car with an auto loan, or any other purchase that requires you to take on new debt.

A new debt means a new debt-to-income ratio, which will require the underwriters to start over. Best case scenario, this will cause a delay in your escrow process. Worst case scenario? You may forfeit your loan approval and lose the house you are in escrow to purchase. Don’t risk it; just wait until you have closed on the home to make any large purchase.

3. Don’t co-sign for anyone

If you have excellent credit, congratulations! You may want to help a friend or family member by co-signing for them, but wait until after you close on your loan to do so. This will present a massive change in your financial situation that may result in losing your eligibility to take out the mortgage at all.

You also want to make sure that whatever you are co-signing for is something you will still be approved for after closing on your loan. Tell your friend or family member that co-signing will have to wait a few weeks.

4. Don’t switch bank accounts

Loan officers and underwriters need to be able to easily track your funds, and changing bank accounts makes it very difficult to do so. If at all possible, delay a change in banking until after your loan has closed to avoid unnecessary issues in the mortgage escrow process.

The same goes for transferring money. Avoid moving money around during this process unless you absolutely must. If you cannot avoid a large transfer for some reason, let your loan officer know to find out how you can best do so without causing unnecessary delay.

5. Don’t apply for new credit or increased credit limits

You may have heard that one way to improve your credit is to have higher credit limits or credit accounts with no to low utilization rates. This is true! However, once you are in the mortgage approval process, making changes to your credit in any way, even for the better, can cause delays.

Think of your credit score as being on pause during the mortgage approval process. This is not the time to make improvements or changes, which will usually just turn into delays and extra paperwork.

To find out more about qualifying to buy a home, contact us any time. Our loan officers are ready to walk you through the process, so schedule a time to talk with one of them. Contac Steelman Mortgages for all home loans in Roseville CA.

IF you enjoyed this post, these might be helpful as well:

5 Common Mortgage Mistakes to Avoid

The Most Important Steps Toward Buying Your First Home

Steps to Determining Your Mortgage Budget

5 Benefits of Buying a House with Good Credit

What’s the Difference Between Pre-Approval and Pre-Qualification?

10 Days to Know About a VA Loan

7 Signs You’re Ready to Buy a House

How to Build Credit to Buy a House

As you prepare to buy a home, having your down payment funded is essential. Are you also prepared for closing costs? Though the details of closing costs will vary significantly, it is important to know what to expect as you get ready for your exciting home purchase.

To help, we have compiled a list of frequently asked questions about closing costs so that you can feel more informed about the process.

What are closing costs?

Closing costs are the fees included in the preparation and processing of your mortgage. Your closing costs are the processing fees your lender will charge for the work involved in putting together the details of your loan, including the approval process, underwriting, appraisal, paperwork preparation, and more.

How much will my closing costs be?

Your closing costs will vary depending on a variety of factors, but a safe estimate is 3%-6% of the loan amount. For a $500,000 loan, you can expect somewhere between $15,000 and $30,000 in closing costs.

When are closing costs paid?

Closing costs are paid when you sign the documents to buy your home, also called closing on your mortgage. Your closing costs will be due at the closing meeting, where you will sign all the closing documents.

Who pays for closing costs?

This can vary depending on your unique situation. Closing costs can be covered by the buyer, the seller, or a combination of both. Asking for seller concessions can sometimes be a way to alleviate some of the responsibility to pay closing costs. In this scenario, the seller will pay some of the closing costs from the proceed of the sale.

There are limitations on the percentage of the closing costs that can be covered by seller concessions, depending on the type of loan you are getting, your down payment, and the occupancy of the property. If you are wondering whether a seller concession might work for you, talk to a profession like one of our loan officers about your unique situation.

What is included in closing costs?

You have already learned that closing costs include all of the processing fees involved in preparing a mortgage. These fees cover a variety of things, including:

• Application fee: Sometimes a separate fee, and sometimes applied as a credit toward your overall closing costs
• Appraisal: A required process to confirm the value of the home you intend to purchase
• Closing fees: Funds that go to the escrow company that is facilitating the mortgage preparation process
• Courier fee: Relevant in situations where courier services are required for transporting mortgage documents
• Credit reporting fee: The cost of verifying your credit score
• Discount points: A way to lower your interest rate by paying some money upfront
• Escrow funds: Funds that go into an escrow account to pay for taxes, homeowners insurance, and mortgage insurance
• Flood certification: A small fee that goes to the Federal Emergency Management Agency if your home is located in, on, or near a flood plain
• Homeowners association transfer fee: A fee that applies to homes located in a community managed by a homeowner’s association
• Homeowners insurance: Required protection for the home from any major damage; a year’s worth of insurance is often required at closing
• Loan origination fee: The cost of preparing the mortgage, including underwriting and processing
• Lender’s title insurance: Protecting the lender from loss in the case of a title dispute
• Lead-based paint inspection: Relevant only to homes built before 1979, where there is potential for hazardous lead based paint in the home
• Owner’s title insurance: An optional expense to cover you from potential title disputes
• Pest inspection fee: The cost of inspecting the property for damage from or the presence of pests
• Prepaid daily interest charges: Interest that will accrue between closing and your first mortgage payment, only sometimes required
• Private mortgage insurance (PMI): A premium that protects the lender in the case of loan default if you are putting less than 20% down
• Property taxes: Fees paid to your local government
• Rate lock fee: An optional fee that is paid to guarantee your interest rate at closing by locking the rate in for a longer period of time
• Recording fee: The expense to notify local government about the new ownership of the property
• Title search fee: The cost of searching for claims on the title of the home that may cause an issue with new ownership
• Transfer tax: Paid to your local government to cover the processing of paperwork to document transfer of ownership
• Underwriting fee: The fee paid to your lender to cover the labor involved in verifying your approval status and preparing the documents
• VA funding fee: Relevant to VA loans to go toward administrative costs for the VA

Still have questions about the home buying process? Scheduling a time to talk with me today!

IF you enjoyed this post, these might be helpful as well:

5 Common Mortgage Mistakes to Avoid

The Most Important Steps Toward Buying Your First Home

Steps to Determining Your Mortgage Budget

5 Benefits of Buying a House with Good Credit

What’s the Difference Between Pre-Approval and Pre-Qualification?

10 Days to Know About a VA Loan

7 Signs You’re Ready to Buy a House

How to Build Credit to Buy a House

With a struggling economy and inflation affecting many would-be first time home buyers, you may be wondering whether buying a house is still a good idea this year. The short answer is, if you are financially prepared with a good credit score, a down payment to cover 3.5% of the home price, and an income that will comfortably accommodate a monthly mortgage payment, real estate is still a great investment.

The first place to start is talking with a loan officer. Schedule a time to speak with one of our loan officers to find out how much you are qualified to borrow and what your interest rate would likely be. Once you know what your monthly payment and overall budget would be, you can more accurately decide if now is the time to buy a home. If you can afford it, investing in real estate is still one of the best financial decisions you can make, and here’s why.

1. Inflation will begin to work in your favor

As soon as you buy a home, inflation begins to work in your favor. Rather than working against inflation as your housing costs rise, your locked in mortgage payment will feel increasingly affordable. As rent prices rise to reflect the overall economy, homeowners benefit by having increase home equity without paying a penny more for this valuable asset.

Having equity in your home can act as a buffer when the economy struggles. Your home is one of the few assets that works for you both now, as a place to live, and in the future, as an appreciating asset.

Experts expect that home prices will continue to grow, even if they grow at a slower rate than they were last year. With a long term mindset, you as a homeowner can reasonably anticipate significant appreciation over time, while locking in your housing costs.

2. Owning a home gives you unique opportunities

When you own a home, you have opportunities you will not as a renter. Not only are you protected from some of the biggest effects of inflation, but your increasing home equity can become a resource for you. Home equity can be used in a number of ways, including:

• Refinancing out of PMI, the mortgage insurance premium you will pay each month if you put less than 20% down
• Take out a HEL (home equity loan) to finance a home renovation or fund a college education
• Open a HELOC (home equity line of credit), best used as a resource for home projects that will add value back into the property

There are also unique tax benefits available to homeowners, as well as other financial opportunities like renting out your home as an short term vacation rental or running a business from part of your home.

3. Many of the benefits of homeownership are more than financial

While the financial factors in buying a home are reasonably at the top of first time home buyer’s minds, there are more benefits to homeownership than the resource of equity and the fixed housing cost. You will also enjoy being in control of your housing, not having to move when your landlord decides to sell or limit your decorating and renovating to what is reversible when you leave.

Other non-financial benefits of homeownership include:

• Being able to stay in the same school district as long as you would like
• Having say over the amenities in your neighborhood if you are part of an HOA
• Enjoying full autonomy over how the land is used for gardening, pets, or outdoor hobbies

To learn more about preparing to buy your first home, start by talking with one of our loan officers. They can walk you through the home buying process and help you discover whether you are ready now. If you are not quite ready, they can direct you to the right next steps to prepare your finances for home ownership.

IF you enjoyed this post, these might be helpful as well:

5 Common Mortgage Mistakes to Avoid

The Most Important Steps Toward Buying Your First Home

Steps to Determining Your Mortgage Budget

5 Benefits of Buying a House with Good Credit

What’s the Difference Between Pre-Approval and Pre-Qualification?

10 Days to Know About a VA Loan

7 Signs You’re Ready to Buy a House

How to Build Credit to Buy a House