8 Things to Avoid During Loan Processing
When you're in the process of applying for a loan, there are certain things you should avoid doing to ensure a smooth and successful loan application process. Here are some things not to do during loan processing:
Don't make large purchases or apply for new credit: It's important to avoid making any large purchases or applying for new credit while your loan application is being processed. This could raise red flags with your lender and affect your credit score, making it harder for you to get approved for the loan.
Don't change jobs or income sources: Lenders want to see a stable income source, so it's best to avoid changing jobs or income sources during the loan processing period. If you do need to switch jobs, be sure to inform your lender and provide any necessary documentation.
Don't miss payments on existing debts: Missing payments on existing debts can negatively impact your credit score and affect your chances of getting approved for a loan. It's important to make all your payments on time during the loan processing period.
Don’t make undocumented deposits. Try to keep your deposits separate and small. The source of large and even some small deposits will need to be verified. Make copies of each check and deposit slip. Avoid depositing cash. Relatives who are giving you gift funds must sign a gift letter. They will also need to provide account statements that show where the money is coming from. All gift funds must be “seasoned.”
Don’t wait to liquidate funds. If you need to sell investments, do so as soon as possible and document the transaction. There’s always a risk that the market will move against you which can leave you short of cash at closing.
Don't provide false information: Lenders will verify the information you provide on your loan application, so it's crucial to be honest and accurate. Providing false information can lead to your loan application being denied or even legal consequences.
Don't ignore communication from your lender: Make sure to stay in touch with your lender and respond promptly to any requests for information or documentation. Ignoring communication from your lender can delay the loan processing and even result in your application being denied.
Don’t be afraid to ask questions! Your loan officer will provide answers if you’re not sure what you should or shouldn’t do while your mortgage is being processed.
Overall, it's important to be responsible and transparent during the loan processing period. Avoiding these common mistakes can help ensure a successful loan application process and increase your chances of getting approved for the loan.