What Not To Do … During the Mortgage Process

When getting a mortgage, there are plenty of things you should do to keep the process running smoothly.  However, in this episode of Arizona Mortgage News Insider Update, Mike Goblet of United Mortgage and Financial Group discusses what ‘not to do’.  Mike shares tips on credit as well as what you should and should not say during the mortgage process.  Watch the full video to learn more.

Matthew O’Brien:  We’re back here with another segment of Arizona Mortgage News Insider Update. We’re here with our local resident expert, Mike Goblet, of United Mortgage and Financial Group.

Today we’re going to cover an interesting topic on what not to do during the mortgage process. Mike, you seem to have some good experience on this from some of your clients and horror stories. Please enlighten us.

Mike Goblet:  Yeah, it’s actually a good subject because a lot of people do things during the process that you would think wouldn’t have an impact but actually do.

I’m going to start with the simplest one that you would think today with everything that’s gone on that it would just be a no brainer, and that is the first thing you shouldn’t do during the mortgage process is lie. Mortgage fraud is a serious federal offense, but there’s a lot of different things that people … Omission can be a lie if it’s big enough, to keep in mind.

Maybe one of the biggest things that we get often is people who go to qualify for purchase of a home, or refinance of a property, that already is or they want to make it a primary or second home, with all the intention of using as an investment property. That’s considered mortgage fraud, called “Occupancy Fraud,” and is a federal offense.

The other real thing to keep in mind with that is loan officers are mandated court reporters. They work for the lender as well. If they’re provided information that compromises their position, like being told, “Well, we’re really going to make this an investment property.” They’re mandated to not let that go through and to notify the lender.

Matthew:  Interesting.

Mike:  Yeah. You would think, “Lying today? Nobody would do that.” Yeah, but do people lie on their taxes? Well, that’s the matter of perspective, and I’m not suggesting, but just really keep it clean. Keep it honest with all the best intention. Whatever you tell your loan officer, they now know and are forced to utilize it. So keep that in mind as well.

Matthew:  It makes perfectly good sense.

Mike:  The other big thing that messes up many, many loans or clients during the process is to take out new debt or new credit cards. This particularly happens during the purchase process when even after you get loan approval people will go “OK. You know what? I’m going to need new furniture, new drapes, I’m already approved so I’m going to go get that stuff now,” and often take out a new credit card or have their credit pulled in order to do that even though they might not get it.

What happens is almost every lender re‑pulls credit at the very end of the process to make sure that there is no new debt that has been added to the clients. In particular, if their debt to ratio is close, then it could really mess up the deal.

Even if it’s not close, what happens is the lender now goes, “Oop, you had a new credit inquiry. We want to know what that was about. We need a letter of explanation, did you take out new debt and if so, how much, etc.,” which, by the way, can now add days onto the closing process.

Again, this happens right at the very end. So, if by doing that, you could also mess up a lock extension which is now going to cost you hundreds of thousands of dollars, as well, or maybe a close of escrow that has consequences in terms of a purchase.

Don’t take out new debt even if you’re in Target and they say, “Hey, you can get 10 percent off this big purchase,” or Home Depot by taking out a credit card, that’s new debt and will slow down the mortgage process.

Mike:  It sounds like really you should do nothing during the process in order to get mortgage approval.

Matthew:  Get everything done in advance. During the process don’t create what could be new obstacles.

It’s a little less in a refinance to put something on a credit card you already have and even a purchase, but as soon as you have your credit pulled or go get new credit, that is going to slow down the process no matter what.

Mike:  Makes sense. Any credit inquiries can also impact it, so it’s…

Matthew:  Yeah, even if you take out the new debit, they’re going to require a letter of explanation to be reviewed by the underwriter. You’re adding three or four days onto the process whether you took out the new debt or not.

Mike:  Especially if you want to lock into a good interest rate. I know they’re going up. You certainly don’t want to jeopardize that.

Matthew:  The last thing is don’t change jobs during the process. We’ve had that happen to us. Every lender actually does what’s called a VOE, verification of employment, right before the very end, literally at the closing date, to make sure the people of employ.

Some people have even said, “Well, I’m going to change jobs, but it’s going to happen after the close of escrow,” but they quit their job. So now when the lender goes to verify their employment, they say, “No. They no longer work here” or “Won’t work here after September 1st.”

Whoops! No lender requires less than 30 days of pay stubs in a new job to verify it. Some require two or three months. So as fundamental as it may seem, don’t change jobs. Don’t even tell the company you’re with, you’re going to change jobs until after the process.

Matthew:  That’s perfectly good sense. Just hold tight, and pretty much don’t do anything during the process.

Mike:  [laughs] Well, just keep doing what you were doing that got you into a good position of being qualified anyway. Just don’t do any new things.

Matthew:  Makes sense. Well, Mike, if people have questions about the mortgage process or possibly looking of getting one through you, what’s the best way to reach out to you?

Mike:  Our office number at United Mortgage Financial Group is 480‑503‑3533. I’m always happy to take calls and answer questions on my cell phone, 480‑220‑2329. I have an email address obviously, atMike.Goblet@unmfginc.com.

Matthew:  Fantastic! Thanks again for an enlightening segment. Be sure to subscribe to our YouTube channel, and pay attention to the blog. Mike periodically creates, in addition to these great videos, updates and things, that you should be paying attention to in the mortgage world.

Mike, thanks again. We’ll look forward to our next segment with you.

Mike:  OK, Matt. Talk to you later. Have a good day.

Matthew:  You too.

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