Mortgage approvals take time, typically at least 30 days up to 45 days. When you first meet with your loan officer, you will get an approval based on the information given to the loan officer. That should include paystubs, w2's, tax returns and bank statements. During the process, sometimes things can change.
Once you have written your purchase agreement, the true processing of your mortgage starts. This can easily take several days to a few weeks – it depends on your situation. If you are buying a short sale or foreclosure we need to get the approval from the seller. On a short sale, your seller approves the purchase agreement but then we also need the seller's lender to approve the purchase agreement. That can take weeks or months to get done.
If you are self employed, you may need a profit and loss statement along with your tax returns. If you are commissioned or get overtime, we will need a verification of employment. Sometimes your verification of employment comes in different then we expect it to.
There are times that we have situations that come up that no one expects – maybe you lose your job or there is a significant weather event that damages the home you are buying. That can quickly turn your approval into a denial.
For some looking at buying right now, another rule change may affect you. Fannie Mae just changed the rules on student loans. In the past we have been able to use the payments on the credit reports, now we need to use a minimum payment of 1% of the balance. For some people, that may turn an approval into a denial. This doesn't affect Freddie Mac or FHA loans – at least not yet.
There are several things you can do as a buyer to help make sure your loan doesn't go from an approval to a denial.
- Don't buy a new car or get a larger payment on a lease
- Don't change jobs – especially not to a commission paid position
- Don't open new credit cards or charge significant amounts on current credit cards
- Don't deposit large sums of money into your account without proper gift documentation
- Don't pay your bills late
These are just a few things that can affect your approval and are easy to avoid! Make sure you pay your bills on time, document any deposits into your bank account and if you have questions on something, talk to your loan officer before you do anything!
All of these things have affected buyers in the past and probably will affect them in the future, we are just trying to make sure you don't have a problem with your mortgage approval. If you aren't sure about something, check with your loan officer. I would much rather have a client call me with a question before they do something, than have to solve a problem that we could have avoided! Especially when some of the problems may not be able to be solved!