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hi I'm Mark Anderson mortgage banker with Paramount Bank I'm licensed to lend in all 50 states and I would love the opportunity to help with your mortgage transaction whether it's a purchase or a refinance you can find my number in the video description below please do call or text me anytime so I'm gonna start a new segment the Tuesday quick tip so for today we're going to cover a very fundamental subject which is the do's and don'ts involved in a mortgage transaction and we're going to start with the do's that's a weird word to say out loud number 1 this is almost certainly the most important thing I say be extremely honest and what I mean by that is when you're going through the application whether it's on an online form if you're working with a lender that uses that or whether it's over the phone or in person I tend to prefer to do mine in over the phone or in person because it allows some back-and-forth communication but be extremely honest on that loan application answer all the questions truthfully and also you're gonna want to volunteer any information you know if the loan officer doesn't ask you a question related to something about your finances your employment your income your assets etc but it's something that you think might be relevant volunteer that information the loan officers job is to help you get to the finish line and to help identify anything that might slow that down or cause any problems so you're only going to be doing yourself a favor by bringing something that could potentially be a problem to that lenders attention during that initial conversation or at any stage in the process if something changes you know you really want to make sure to to be extremely honest throughout the entire transaction next up the whole process of getting your loan approved is built on the foundation of the application itself but the application itself is no good without the supporting documents that go along with that application so that's that laundry list of documents that you get from your lender up front the pay stubs the bank statements the w-2 forms the tax returns etc it's very very important to provide all that information as quickly as you possibly can and also you want to be prepared throughout the process there are going to be multiple stages where you may be asked for additional documentation and it is always best practice to insure your own customer service experience is good throughout to get that information or that documentation over to the lender very quickly next up stay current on all of your monthly payments that means no late payments on credit cards certainly on a mortgage try to keep everything in order if your stuff is not on auto pay maybe get it on auto pay it's very important not to miss anything a single missed payment could impact your ability to qualify for that loan and that's a good example of something that can kind of pop up and cause a problem because there are various checks and balances built into the process that can identify if you've made a late payment after the process has started next up reference this earlier with the number one issue of being extremely honest but I thought it was important to spell this out specifically anything that changes even if you're not certain that it's going to be a problem or if it's going to impact anything you want to be in the habit of notifying your loan officer about anything the changes regarding your finances regarding your employment etc next up this is something that causes I'm going to say more problems than anything else from getting a loan from the beginning of the process to closing is not having a clear plan for documenting that you have the sufficient funds to qualify for the loan so this may sound a little bit odd and I think for somebody that that's not in the lending business this may seem a little bit strange that this is that this is a problem but it is the case that well before closing in order to provide a full approval the lender has to see the assets that are going to be used for the transaction and not only do we need to see an account balance that shows that you have sufficient funds to qualify we also need to know where that money came from so keep this in mind we are going to be looking at two months worth of bank statement activity and the first thing that I do when I look at a bank statement after seeing the balance of course is I review that bank statement for any large deposits now the definition of large in this case depends on the loan program that you're looking at but a general rule of thumb if there is a deposit over 500 bucks the lender is is possibly going to need to know where that money came from there are acceptable sources and there are unacceptable sources and this can be a real problem if you haven't made the plan very clear to your loan officer now is it is you know in a simple case let's say you already have the money there are no large deposits over the last two months that's a clear-cut case we can see upfront that you have the money but it is not uncommon for there to be lets say gift funds coming from family maybe there's a sale of property that's going to be used to shore up the asset balances enough to come to closing maybe you've got cash under a mattress cash under mattress is a good example of an unacceptable source of funds and we in the lending industry you know I don't necessarily know that this is fair but it's the way that it is we're kind of expected to be a line of defense against money laundering and illicit activity of that nature so we are actually really required to drill down and identify for this real estate transaction where is the money coming from so it is very important I would say during the loan application itself especially if you don't already have enough assets on that day it's very important to talk through that plan with your loan officer because there are going to be documentation requirements associated with any new funds that are coming into the picture so let's move on to the don'ts so number one and it's just chosen is number one because it has come up over and over and over again don't change jobs if you can at all avoid it the worst thing that can possibly happen and this has happened to me not just once is a day or two before the closing we will do a verification of employment and here oh you know Bob doesn't work here anymore that's a huge problem because the application is what used to determine your approval your eligibility and maybe you wouldn't think it's a big deal because the new job you're making more money I hear that in every one of these cases when it comes up well mark I don't know why you're worried you know I'm making more money so that should make me a better a better credit risk etc the problem there is we then have to fully document that new position and if you've just got a couple days until closing that's panic that is not a fun thing to have to do it can cause delays it can cause problems so it's best to avoid it at all if at all possible the name of the game though is let's say you do have this amazing opportunity that comes up the name of the game is communication with your loan officer you are your best advocate in the transaction to ensure that you have a good customer service experience so if there is a job change that you're looking to make touch base with the loan officer come up with a plan because there are going to be documentation requirements associated with that job change next up don't do anything that changes your credit report at all and this means don't apply for any new credit certainly don't open any new credit this also includes things like don't run up your credit card balances best practice in my opinion is don't use credit cards throughout the transaction if your balances go up beyond a certain threshold we're actually required to recalculate your debt to income ratio and there are a number of times where the debt to income ratio is maybe right on that border line between approved or not approved and if there is a change in your credit balance that's significant enough that can cause us to have to go back to the drawing board on that and it can potentially cause a real problem [Music] next up don't make any large deposits without notifying your loan officer now this dovetails with what I mentioned before about having a clear plan for the assets that are going to be used for the closing this is very very important and it's it's so important that I decided to put a separate line item here in the don'ts section again it may seem innocuous to make you know you've come into ten grand somebody wrote you a check you sold something making that deposit in the account will potentially trigger the lender to ask where did that money come from if it's an acceptable source of funds there's going to be documentation we're acquired to validate that source of funds if it's an unacceptable source of funds that could potentially cause a problem depending on what your current asset balances are in the file so just best practice again is don't make any large deposits without getting on the phone or through email with your loan officer next up this one I kind of hesitated to put it on there but I think it's important I don't want it to come across the wrong way there is an unfortunate expectation that the loan process is going to make sense and I actually don't have any problem with telling people just point blank there are many times or the loan process to somebody that's not in the industry or even to somebody that is in the industry there are many many times where there are rules there are guidelines or documentation requirements etc that that don't make logical sense a quick example that I can come up with is let's say you have a lot of assets in the bank but let's say maybe you just quit your job this is extra scenario that I ran into last year somebody just put their job they had enough money in the account to actually purchase the property in cash and they presumed that on that basis that they be approvable for a loan well the loan underwriting rules especially under the regulatory environment where were we're required as a lender to prove the borrower's ability to repay you may think that the assets alone would qualify that person because they could clearly pay off the loan it's unfortunately not the case you've got to have income in order to qualify for a traditional loan and that is a great category where and I've even seen extreme examples where somebody's got millions of dollars in the bank and maybe we can't get them approved for a standard loan for a 400,000 and that's really silly that we can't do that but the mortgage guidelines again they're not set by companies like like my company paramount bank they're set by these large mortgage agencies Fannie Mae Freddie Mac FHA the rules aren't always logical they don't always make sense they're certainly not always fair but what I view my job as is the loan officer is to help you navigate that process which sometimes has some aspects to it that are not super illogical and it's really my job to kind of Shepherd you through that and to get around things where this really most commonly it relates to say request that the underwriter makes for documentation or paperwork you know I know that sometimes the documents that we request or the information that we asked for may trigger an eye-roll or two and I understand that there are things that we asked for that seemed ultra nitpicky oh we need to know this land that you own in Idaho we need to know what the taxes are for that and that may seem really silly that we have to get that that fine tuned into the nitty-gritty of every little number but it is unfortunately the rule set that we have to operate under in there are many such cases of things that don't necessarily always make a lot of sense and then finally this is attended on a more positive note don't try to do everything yourself particularly on a purchase transaction I find it's the case that a lot of people don't lean on their realtor enough and then maybe they don't lean on their loan officer enough you have whether you're doing a refinance or purchase you've got professionals that are working for you in the case of a realtor the Realtors job is not just to open doors for you they're not just a gatekeeper of information especially in the internet age where all the real estate information is publicly available it's the Realtors job to advocate for you so when things get tough in your contract process you know the classic example is home inspections you know home inspections are not good you've got some things you need to negotiate for it is the Realtors job to advocate for your interest in that and you need to lean on them for that another example would be a case of let's say an appraisal comes in low on a purchase which is something that just happened to one of my clients a couple weeks ago that agent in that case that realtor ended up being very proactive and helped out a lot but it is it is sometimes the case that I find that clients are not leaning on the people that are supposed to be working for them so don't be bashful this is about your transaction it's about your closing call me call your Realtor call the title company make sure the people that you're paying fees to are earning their keep lean on them it is it is our job to help throughout this crazy process is getting a mortgage if you have any questions for me please do reach out to me anytime at the number in the description below I look forward to talking with you thank you very much for watching this quick tip