By J Mansisidor
In a previous article, I discussed the importance of managing your credit and how it impacts several parts of your mortgage loan. This article will discuss timelines and how to prepare for your home purchase to make it as smooth and stress-free as possible.
Let’s start by identifying the first of three considerations (planned after graduation and before the start of your residency) that can, for better or worse, impact your home purchase timelines. I’m referring to any major events on the horizon.
Events can include things like a wedding, honeymoon, bucket list vacation, or even expecting a new baby. If you are a fourth year medical student approaching graduation and you have or anticipate major expenses associated with a life event, you want to be mindful of where the funds are coming from (credit card advances, shower or gift monies) and to communicate that information to your loan officer. Certain funds are needed for your mortgage, which must be documented appropriately.
Your availability through the underwriting process is essential. Most medical school graduates know by March where they have matched. Be sure to provide your loan officer with all the necessary documentation requested and dates you will NOT be reachable to ensure your loan officer works around them. If you are going abroad or to a remote location (applies to vacation) with no way of reaching you, provide someone with access to your accounts and updated documents on your behalf.
If you cannot attend the closing in person, make sure you have a POA (power of attorney) in place before you leave. Most lenders require that the POA be reviewed by their legal/closing department. This also holds true if you are expecting a baby and your due date falls near your closing date. Establishing a POA will make sure that your closing can stay on track even if the baby’s arrival is off schedule.
Finally, to ensure a smooth closing process, you need to remain mindful of your credit all the way through your closing date. Beyond the initial credit check that takes place, underwriters/processors will pull a soft credit 10 days prior to closing to see if any new credit has been established or if existing credit is charged up. If your debt-to-income ratio is already tight, anything charged on a card can take you from qualifying to not qualifying that quickly. The best rule of thumb once you start the mortgage process is to delay any major purchases or opening new accounts until after you close.
Most last-minute challenges can be avoided with an upfront conversation with your loan officer. Some loan officers will not consider these conversations until it is too late, so it is wise to initiate these discussions yourself.
In the Fall edition, I will review the second and third considerations needed to plan a home purchase. We will explain the movement of monies and setting the close date.
J. Mansisidor is a Specialty Loan Officer and Medical Loan Specialist with Truist Bank.