(Closed) Mortgage "Rules" people don't tell you about

posted 6 years ago in Home
Post # 3
Member
1310 posts
Bumble bee
  • Wedding: December 2011

I don’t think my lender minded so much about changing careers – I switched industries about 16 months before we applied for a loan. I did hold off on switching jobs AGAIN (back to my old industry) until after our loan went through.

We did have trouble with moving money around. We had our down payment saved a couple of different places – and I was trying to get it all moved into one account so we could write one big check. They went bananas over my bank statement showing the deposits and I had to run all over town getting copies from the several financial institutions to prove to them where the money came from.

At one point my husband had to sign a form stating the money deposited into MY account from HIS account was a “gift” from him, and not a loan that I had to pay him back… whatever. It worked out but it was so annoying.

Post # 5
Member
14661 posts
Honey Beekeeper
  • Wedding: June 2011

I think the mortgage industry and credit bureau are somewhat mysterious entities, but there are no hard fast rules on their like those that would cause you to get denied a loan.  I use credit cards and pay them off every month so I’ve never had any sort of installment loan that I kept a balance on.  I had an 4 savings accounts and 2 checkings accounts which I regularly moved money around depending on who had the best rates, one of I opend a year before getting a mortgage, and closed a checking and savings account a few months prior.  My credit score was still over 750 and I had no issues getting a loan.  They only specified that if there was a large movement of cash, that they had to be tracable moving from one of my accounts to another, and that the cash for closing had to be verified as available in my account – meaning someone else could not be paying for me.

ETA: They also only asked for the last 2 months of all the statements, so they wouldn’t have known if I was moving large amounts of cash before that anyways.

Post # 6
Member
500 posts
Busy bee
  • Wedding: April 2013

One thing we learned is that different lenders have different rules. So, if you don’t get approved at first, you can try again with another lender. That’s what we had to do and it all worked out fine in the end.

Post # 7
Member
870 posts
Busy bee
  • Wedding: September 2012

Yeah my experience was more like @pinkshoes. I regularly move money into my ing accounts (I have several too), neither my husband nor I had installment loans any time near when we applied for our loan (I paid off my car several years ago, and that’s been my only one.) but we didn’t have any trouble with a loan.

It may be that if you have other red flags these are things that might add issues, but any one (or two) of them on their own isn’t going to be an issue. 

Post # 8
Member
29 posts
Newbee
  • Wedding: October 2011

We just got our mortgage approved yesterday and the process was definitely a bit bizzare. It took about a month total and was submitted right before Xmas (avoid holidays if possible since no one seemed to even look at it until Jan 2). The first bank the mortage group sent our application to was going to take 3 weeks to review it and the seller is super anxious to sell and was harassing my lawyer/mortage people/co-op management company so they sent it to a different lender last week and it took less than a week to get approved. 

I definitely move money around but haven’t for the last 2 months (except the escrow) and it didn’t seem to be a huge problem and all they wanted to see was a copy of the cancelled check. They only asked for my 2 most recent bank statements as well so they didn’t get to see some of the “mysterious deposits” from October of savings bonds I cashed in which may have saved us a headache. I think if you move your big chunks of money around at least 4 months before, you should be totally fine. Mortgage companies seemed to be very excited about “gifts” and seemed to worry that they were secret loans so they pay attention to large amounts of money appearing without a source. 

In terms of credit, I’ve only had credit cards (1 active and several very dormant, like department cards of stores I shop at once a year, but probably 10 total in my lifetime) and have never kept a balance. My credit score has always been excellent and was > 800 when they ran it a few weeks ago. I’ve never had any installment loans and it didn’t seem to cause me any trouble. I don’t think one should seek out an installment loan unless you need to, but perhaps I’m mistaken. 

My husband and I both changed jobs in the last year and they didn’t seem to care, which I was surprised by. We stayed in the same field though and I’ve been at my current job 5.5 months and he has been at his for 9 months. I thought that would be a huge red flag for them, but apparently not. We both have professional jobs though, which may help. 

The mortgage people basically wanted all our W-2’s, tax returns, employment verification, paystubs and bank account statements for the last 2 years and ran a credit check. As far as I can tell they are basically doing a income/assets to debt ratio to make sure you can stay afloat without difficulty. So keep all your documents handy! Never fun to have to fish out W-2’s from 2010 ASAP. 

Post # 9
Member
721 posts
Busy bee
  • Wedding: March 2012

I work in mortgage (refinances). The process has definitely become more involved.  The large deposit issues that you all mentioned are guidelines/requirements that all financial institutions have to follow legally. 

Post # 10
Member
10366 posts
Sugar Beekeeper
  • Wedding: September 2010

2. and 3. are SO true and totally caught me off guard. Luckily, we hadn’t really done anything to effect our chances.

4 is not necessarily true. We opened an AAdvantage credit card a year before our home purchase in November, and it didn’t effect us. We still had credit scores around 800 and they didn’t blink at it. We did shop around a car loan in September, too, but decided to pay cash for the car. They wanted an explanation for the hard pull on our credit, but again, it didn’t cause us to get denied.

Not moving around money is a HUGE deal, though. Especially if you are getting help on the down payment. We had to have gift letters signed and statements from my FIL’s bank accounts. Not everyone would be thrilled with having to send a bank their financial records when gifting money, I bet.

Post # 11
Member
1668 posts
Bumble bee
  • Wedding: September 2012

We had a few problems that we wern’t expecting.

Darling Husband has 2 jobs and I have one. We didn’t know you had to be at your job for a year before they will even consider it.  If it’s a part time job (mine is part time and DH’s 2nd job is part time) it has to be 2 years.

We saved money for the down payment with cash, and apparently that is a no-no because when you go to deposit it to write the check, they will question where you got all that money. So we were going to give the cash to my grandma and she would “Gift” us the money, but that wasn’t good enough either because they will want to know where SHE got the money.  Luckily, my parents were due to get a chuck of change for an insurance claim, so we gave them the cash and they “gifted” us the money.  That worked because there was a way to trace where that money came from.

Post # 12
Member
772 posts
Busy bee
  • Wedding: December 2011

@Fall_In_Love22:  Wait, cash?  As in under your mattress?  How much was your down payment?  Now I am totally curious!  We will likely need to bring 15k for a downpayment, which seems like a lot of money to have lying around in twenties! 

Post # 13
Member
1430 posts
Bumble bee

Very interesting.. my husband and I are going to get pre approved soona nd this all makes me even more stressed now!

Post # 14
Member
4656 posts
Honey bee
  • Wedding: August 2013

Holy crap. 

I am so never buying a house. 

Dang.

Post # 15
Member
886 posts
Busy bee
  • Wedding: November 1999

While these are certainly good points to consider, as others have pointed out, there are never any hard and fast rules. Every lender is different. I know I broke two of the “rules” the OP listed. Every potential buyer and general situation- including the market where they’re buying, their financial circumstances, their credit history etc- are so incredibly variable that if it were easy enough to do a “one size fits all” application form to simplify this process that would’ve been done long ago. But the fact is that it’s not easy. It’s kind of like buying insurance. Every insurance company has its niche about the type of client they will cater to. The products are slightly different, the fees are different, and who they will or will not take will differ. But each company has its own way of assessing the “risk” that a person will eventually file a claim, and bill you accordingly.

Post # 16
Member
134 posts
Blushing bee
  • Wedding: July 2012

I agree with the PP we just bought a house and got a great rate (3.25) and “broke” almost all of those rules. 

1 we got married in July and closed accounts and moved money around a lot!

2. My husband bought a car about 4 months before our house

3. Every paycheck I transfer money around

We had to supply a lot of backup documents bit it wasn’t too bad. I think what’s more important to lenders is length of wok history and income vs loan amount. We didn’t max out the amount we could afford and we had 20% down which I think made it easier for us to get approved.

 

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