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Mortgage Disasters to Avoid

When you are trying to work through a mortgage refinance or a home purchase, it can be easy to get frazzled.  You have probably heard some horror stories about this process as well.  Rather than dreading the process and worrying about the problems that might come up, if you are prepared you can avoid some of the most common mortgage nightmares. 


One of the most common mortgage nightmares is a mistake that is easy to make, but can be a big problem to you when it happens.  Once you have saved up enough for your down payment, you should leave it in your account.  Banks want your money to be seasoned, and if you are moving money from one account to another it becomes very hard to track.  The bank will require you to produce a paper trail of documentation that could take a long time to find, and if it is not complete, they may not accept it as proof that your money is seasoned.  This is important for both conventional loans and bad credit mortgage loans. 


For instance if you tell the loan officer that your down payment will be coming from a certain savings account, he notates that on the application and verifies it by looking at the bank statements you were required to produce.  It is verified again at closing, and if you decided to make the payment from a different account, you may have nullified the approval of your loan.  You may have even signed all of the closing papers, but if the money is coming from a different source, the underwriting process must begin all over again, which could delay your loan funding for  a while or may even cause you to lose the loan. 


Another common mortgage nightmare is not having enough money in your bank account.  You simply cannot use cash for a down payment, so if that is your plan, forget it.  Put the money in your bank account and let it sit there for at least two or three months.  In fact you have to show that you have enough money in your bank account for the down payment, the earnest money and all of the closing costs.  The lender will verify that the money is there and may require documentation to prove where the money came from if the deposit was a recent one.   


Always be totally truthful on your application.  If you omit something or misrepresent some information, you may find that you have committed a felony in the form of fraud.  Simply tell the truth and provide the information the best you can on first mortgage loans and when you are doing mortgage refinancing. 

Paying attention to these little things can keep you from heavy-duty mortgage nightmares.