Avoid Lender Approval Delays
Avoiding Lender-Approval Delays
If you’re getting ready to buy a home, you’re likely realizing that one of the most important parts of the process is getting approved for a mortgage that works for you. To get the best rate and avoid losing your deposit, steer clear of these common mistakes.
Leaving out details from your financial profile.
The best way to avoid doing this is by having a great mortgage lender. Making sure you include not only your basic information, employment, and living history, income, assets, and debts, but also ensuring you answer every single question. Leaving details out of your profile can throw off the entire process, so having someone who is meticulous enough to make sure all your information is made available is key.
Assuming pre-approval is equal to actual approval.
Pre-approval for a mortgage means that you’ve talked to a potential lender or maybe even provided some documentation that gave the impression that you will be approved for a certain amount. Don’t be confused - this is not an actual approval. You need to make sure your loan is approved by an underwriter before making any offers to buy a home. When you are “underwriting approved” you will be able to get a formal loan commitment. Without this document, there is no proof of actual approval, meaning that your profile has been evaluated but nothing official to show approval.
Failing to provide every single piece of documentation needed.
Your lender is going to want very detailed documentation of your financial profile, including the following:
- Pay stubs covering 30 days
- 2 of tax returns & W-2s
- YTD business financial statements (if you’re self-employed)
- 2 months of statements for all your asset accounts
- Explanations and paper trails of all deposits withdrawals over $1,000
- A home insurance quote with adequate coverage
- Full financial information on any other homes/businesses you own
You will need to provide all these documents, and if you have a commissioned or variable income, you will need to give permissions to your lender to verify that income. Your credit will be run, which can expose any information you didn’t disclose.
Not knowing enough about mortgage rates.
Once a seller accepts your offer, you will be in contract on that home and you will be ready to lock in your mortgage rate. You cannot lock your rate until you’re in contract, which means that any rate market movement can impact you until then. Rates change throughout each day, and they are priced based on how long they are locked. A shorter lock, about a month or less, will have a lower rate than a lock of 60+ days. If you want to avoid any surprises, talk to your lender and ask them to use your closing timeline to quote rate locks.