I thank those of you who commented to me about how they enjoyed last week’s article, and separately to those of you who appreciated how it correlated to the theme of the week. This week we will conclude with our five final mortgage plagues.
#6 Don’t be biased about your home.
I find that many homeowners are very passionate about the real estate market. Not only do they have a strong prejudice of what their house is worth (mind you, it’s always less than the strong opinion of what they think it should be worth to the town assessor for taxes), but many are avid followers of the homes in the neighborhood that are being sold or built around them. It’s fine to have an estimation of what you think your home might appraise, but when speaking with your mortgage lender it’s best to be very realistic and practical of truly comparable homes that have sold. Moreover, many homeowners take for granted some of the deferred maintenance, repairs or damages that are existent in their homes that might make for a challenging appraisal situation. Many cases are manageable if you are working with a direct lender that is aware of the circumstances in advance and are guided judiciously.
#7 Don’t withhold employment information.
Every applicant will have to furnish comprehensive employment information going back at least two years. The employment will need to be consistent and continuous. In addition to merely providing these details, all employment will be verified directly with the employer. I like to tell my clients that employment will need to be verified for “past, present and future” work. This will usually be accomplished by providing your lender with the past two years of W2’s and/or Tax Returns, plus current paystubs, and with telephone confirmations. If there are any gaps or inconsistencies in any part of your employment history, be upfront with your lender so that they can navigate the situation accordingly.
#8 Don’t assume your know your credit profile.
Many people are very aware of their credit profile. They either subscribe to credit services that help monitor their credit, or they astutely manage their debts in other ways. That said however, I cannot tell you how often I work with clients who are shocked when I tell them about a collection account, a medical judgement, a late payment on an account they either co-signed or were not aware of, or something else obscure that was truly unbeknownst to them. Not being aware of a derogatory account, or better yet, being faultless about an erroneous credit blemish – may often not prevent it from negatively impacting your credit score, and sometimes your mortgage outcome. As much as the credit services tell you not to have a lender “pull your credit,” doing so in a timely and sensible manner will help them (the qualified ones, at least) best guide you through your credit circumstances that may not be as pristine as you thought.
#9 Don’t cut corners to save money.
Unfortunately, I too often come across situations where a person ends up doing more damage than benefit by trying to save a few bucks. Whether it be skimping on a more expensive Attorney in lieu of using a family friend or relative; or forgoing services by a home inspector (or using a cheaper, less reliable inspector in the first place); or neglecting to get certain title upgrades like a property survey; or trying to save a few dollars annually by watering-down a homeowners insurance policy – there are many delicate demands and services that should be carefully weighed with the guidance of a competent professional before cutting corners for a few dollars you think you might be saving today.
#10 Don’t hesitate to be open with your lender.
This “plague” is the catch-all of all the others. Transparency with the right mortgage lender is invaluable. If there is any kind of information that you are withholding from your lender because you feel it might cause an issue with your loan, chances are it will come up one way or another. I encourage all my clients to send me anything and everything that they have without filtering the documentation. This saves them the time and aggravation of having to sift through mountains of paperwork and analysis. While this is problematic to many banks or brokers who are merely “paper pushers” – working with someone who can look at everything and evaluate the situation with you in real time is irreplaceable. Don’t leave your mortgage banker in the dark! Special shout out to Evy and Shimmy Stein – Mazal Tov!
By Shmuel Shayowitz
Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience including licenses and certifications as certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected]
