Don’t delay lender approvals when getting ready to purchase a house

If you’re getting ready to buy a home, you likely realize 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 having a great mortgage lender. Making sure you include the basic information, employment and living history, income, assets, and debts, but also ensure 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 available is key.

Assuming pre-approval is equal to actual approval

Pre-approval for a mortgage means you’ve talked to a potential lender or maybe even provided some documentation that gave the impression you will be approved for a certain amount. Don’t be confused – this is not an actual approval. 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.

Failing to provide every piece of documentation

Your lender wants very detailed documentation of your financial profile, including the following:

  • Pay stubs covering 30 days.
  • Two tax returns and two W-2s.
  • Year to date business financial statements (if you’re self-employed).
  • Two months of statements for all your asset accounts.
  • Explanations and paper trails of all deposits/withdrawals of more than $1,000.
  • A home insurance quote with adequate coverage
  • Full financial information on other homes and 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 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 ready to lock in the mortgage rate. You cannot lock in the rate until you’re in contract, which means any rate market movement can impact you until then. Rates change throughout each day, and 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-plus days. If you want to avoid any surprises, talk to your lender and ask them to use your closing timeline to quote rate locks.


Karen W. Hall