You’ve been preapproved to go shopping, but just how long is your preapproval good for? The short answer is, “Until your situation changes”. Okay… But what does that really mean? It means that if you’re good to go today, then you’re good to go once you find a home if there are no changes to your application file.
Things that can change along the way are things related to Credit, Income, Employment, Assets, Liabilities, and Family Situation. Let’s start with Credit: You forgot to pay a credit card bill on time, and they reported you late to the credit bureaus. That could tank your credit score so you may not qualify anymore, or you may only qualify at a higher interest rate. That would be a “situation changes” sort of thing. Another classic case is where you pull up to the final walk-through of the home you’re trying to buy in your BRAND-NEW CAR! That new car loan debt could change your credit situation so you no longer qualify. Many buyers don’t realize that your mortgage lender gets notified if someone pulls your credit – so we’ll see it and have to find out what happened.
Income and Employment changes can impact your situation as well. If you get a nice job offer while you’re shopping for a home, should you take it? If your car breaks down and you need another one, should you buy one? Some lenders and helpful real estate agents will tell you that you can’t do ANYTHING until your loan closes, and that isn’t true. My best advice is, BEFORE you do anything like add more debt or switch jobs, ASK YOUR LOAN OFFICER BEFORE YOU DO IT! We are not here to catch you doing something bad or prevent you from living your life! We’re here to help! So, we can get the facts and see if that “situation change” will impact your preapproval or not.
Another classic problem is changes is assets. If you’re planning on using some of your own money for the loan, changes in assets can create problems. Obviously, if you spent your down payment that you were planning to use and we based your preapproval on you having that money, that’s something you should let us know. But the #1 problem we have with assets is when WE CAN’T VERIFY WHERE YOUR MONEY CAME FROM. Mysterious deposits that show up in your bank accounts that we can’t prove what they are? Big problem. Maybe your parents get excited about your purchase and surprise you with a gift to help with the costs. HOLD ON THERE!!! Before you do ANYTHING with that money – talk to your loan officer! With the Federal Government’s “Patriot Act” rules to combat terrorism and money laundering, we have to account for any and all money used in a mortgage loan. It may or may not be a problem for your file, but please find out before you do anything with surprise money. I could tell you horror stories about this one…
I mentioned “Family Situation”. That one sounds weird, so what are some file land mines with “Family Situation”. A common one is getting married during the home shopping process. I’m a romantic at heart and I love a good wedding, but in some cases – especially in what are known as “Community Property States” – uniting with your sweetheart in marriage can mean you are marrying his/her debts and credit scores (a bit complicated to explain all the possibilities here). On the other hand, marrying may actually improve your purchasing power too. So, like with other things, check with your loan officer before you walk down the aisle together.
One other “Family Situation” has to do with childcare or child support payments. These may be considered “debts” for your file, and we won’t see these on your credit report, but during the file processing, we will very likely uncover these things. If you have these obligations – paying for childcare or paying child support – please bring it up early so we can make sure the file doesn’t blow up during the process.
VA Home Loan BATTLE PLAN 