Welcome to week 3! By this time, you’re probably getting anxious—and super excited—to move into your new home. The good news is that there’s not a whole lot of work for you to do during this period; on our end, we’re getting to work on all things financing to bring you to the finish line.
As we head toward the completion of the loan process, we’re working on receiving the coveted cleared to close. In laymen’s terms, this means that the underwriter has reviewed your entire file and approved your loan. As long as nothing crazy happened between week 1 and week 3 (like you maxed out every credit card you own or lost your job), your loan will be approved, and you’ll be ready to move forward.
Keep in mind that banks have to deal with a lot of regulatory processing and paperwork to ensure compliance with a variety of federal standards. The most important of these is the Consumer Financial Protection Bureau, an agency that makes sure banks, lenders and financial institutions treat you fairly. Be on the lookout for paperwork that verifies the interest rate you’ve locked in, as this provides you proof that your loan rate is set. There will be other regulatory items sent your way, and these all need to be signed in order to move forward with closing.
We’ll also confirm all 3rd party invoices in your file, including the title, appraisal, and homeowner’s insurance. Once these are verified, we can order the CD, or Closing Disclosure. The awesome—and helpful—thing about this Closing Disclosure is that it will lay out all of the 3rd party costs for you in one document. Before this document, all financial costs by me have been estimates, as neither you nor I can control the final charges of these items. The Closing Disclosure will list the actual costs that were required to manufacture and process your loan to get it to its ‘cleared to close’ status.
Remember: The Closing Disclosure will need to be received and signed at least 3 days prior to closing to be in compliant with the CFPB (Consumer Financial Protection Bureau).
Some of the other things you’ll want to start doing in week 3 relate to your physical move. You’ll want to start packing, schedule your movers, switch utilities, change your forwarding address at the post office, and make sure your current landlord is up to date on your plans. One thing I can’t stress enough: use this opportunity to streamline and GET RID OF JUNK! If you come across a bunch of stuff you didn’t even remember you had, now is a great time to downsize and start fresh. The better prepared you are to move, the less stress, anxiety, and headaches you’ll create for yourself when the day finally comes.
QUICK MORTGAGE TIP: DON’T jeopardize your credit by buying a ton of new furniture—or a new car (yes, I have had clients do this 2 DAYS before closing).
The reason for this advice? Your debt to income ratio is how you get approved for your home loan, and your credit report is on file. If you get your credit report pulled while trying to make a big purchase with one of your cards—or the balances on your credit cards increase—we’ll get notified, which may require us to re-underwrite your loan. This could ultimately lead to you losing your loan qualification; in the bank’s eyes, once your debt to income ratio changes, you’re no longer the same qualified borrower.
The best rule of thumb is to avoid using credit while under contract on your new house. You want the last few days of closing to go as smoothly as possible, and after all the work you’ve put in, you don’t want anything to jeopardize the process.
It’s time to move on to the next lesson…you’re almost there!