Things You Will Not Like About Today's Loan Process

These things about today’s mortgage loan process will drive you crazy. Know what lenders will want….

Patriot Act

This says lenders do not make loans to drug dealers, money launderers or terrorists. Obviously, 99.9 percent of today’s mortgage loan borrowers are completely on the up and up. However, this does not change the fact mortgage lenders are going to be under a very tight scrutiny to have to verify every single dollar in that bank account.

Any dollar going into your bank account in excess of $200 beyond your income is going to be have to be explained, documented and sourced. This means if you’re transferring money around you will need to produce a paper trail on those funds.

Opening and closing credit

This one is a biggie. Let’s say for example you have a credit card that has a monthly payment at $150 per month and a bed loan that has a payment at $75 per month, all in all, your payments tally out at $225
per month. Sounds manageable right? Well those debts are exactly the basis for how your lender will qualify you and support your ability to repay. If you take more debt or close credit accounts this can adversely
affect your score.

Soft pull before closing

Mortgage lenders pull your credit again before you draw final loan documents and sign docs to buy your house, or sign your life away on another refinance. Lenders pull credit at the beginning of the mortgage
loan process to identify what liabilities you have and determine how they’re going to put together and structure the mortgage loan that you’re applying for with your income and other monthly obligations.

Once the process has begun and your loan is through underwriting, before loan documents go out for you to sign, the lender pulls a soft credit inquiry.

The soft credit pull does not adversely affect your credit, but it does provide a reading on any liabilities that may have changed since your original application. If any of these original liabilities changed you may face a predicament and potentially not being able to qualify for financing.

Do yourself a favor - take every piece of advice and every tip your mortgage company provide you at the beginning of the process and you’ll have no problems being able to secure financing. A trusted and experienced mortgage loan professional can very easily provide you the guidance necessary in explaining the ins and outs of the little things that can turn into big things if not properly handled.

Scott Sheldon is Senior Loan Officer and consumer advocate based in Sonoma County, CA. Scott has been originating home loans for nearly decade. His weekly consumer articles offering key mortgage insight and credit tips can be seen in Yahoo! Finance, AOL Real Estate, Business Insider, Realtor.com, Fox Business, MSN Money and many others.