Don’t do these things before closing on your VA Loan
VA loans offer the most flexible underwriting guidelines, including a 0% down payment for veterans.
But don’t let the flexible underwriting requirements get the best of you.
A few simple mistakes, and you could lose your VA loan approval right before the closing.
To keep your VA loan on track for closing, ensure you don’t do the following.
Don’t Make Any Late Payments
Your payment history is the most significant part of your credit score.
One late payment (30+ days late) and you could damage your credit score and lose your VA loan approval.
Even if it’s an oversight, it could affect your loan approval.
Make sure you stay on top of your due dates and pay your bills on time.
Lenders pull your credit again right before you close on your loan.
If any payments were made late, it could cause the lender to turn your loan down or, at the very least, send it back to underwriting to make sure that you still qualify.
Don’t Make Any Large Deposits
You might not think large deposits would cause a problem, but they can be a red flag for lenders.
Your deposits should coincide with your income or have a paper trail proving their origination.
It’s best, though, to avoid making any deposits that are out of the ordinary while the file is in underwriting.
Instead, save it for after you’ve closed on your loan to avoid any delays in closing because lenders need a paper trail for the deposits.
Don’t Rack Up More Debt
We mentioned above that lenders will pull your credit again right before you close.
If they notice any new credit accounts or higher credit balances than when you originally applied, it can change your debt to income ratio, resulting in the denial of your loan.
Your debt-to-income ratio is an important factor during underwriting and racking up more debt will increase it.
Avoid using your credit cards or applying for any new credit when you’re in the middle of the mortgage process to avoid any issues.
Don’t Quit Your Job
Along with checking your credit before closing, lenders will also verify your employment right before closing.
Lenders want to make sure nothing has changed since you were originally pre-approved for the VA loan.
Since a lot of time can pass between when you apply for a home loan and when you close, there is a chance you could change jobs.
If you can help it, wait to change jobs until after you’ve closed.
But if you lose your job involuntarily, tell your loan officer right away so you can figure out your next steps.
In Summary
VA loans have the most flexible guidelines, but that doesn’t mean lenders overlook everything. It’s the lender’s job to make sure you can afford the loan beyond a reasonable doubt.
If there are any ‘red flags,’ lenders could delay your closing or even deny your loan right before the closing.
Try keeping everything status quo after you get pre-approved.
Lenders pre-approve you based on a snapshot of your financial life.
So keep it that way, and you’ll have a good chance of closing your loan on time without needing more documentation or risking your VA loan approval.
Are you ready to apply? Start the process by completing the form below.
FAQs:
What happens if I end up with a late payment?
Underwriter may request an updated credit report showing what the score is with the late payment. The new credit score must meet the loan requirements for qualifying.
What happens if I add new debt?
If new debt is added the file will be re-reviewed to determine if the debt to income ratio meets the loan requirements.
What if I can’t provide the large deposit information that the underwriter is requesting?
If you can’t provide the proper documents, the loan would have to be restructured, it can also result in a closing delay.