Sometimes telling everything you know or think can be counter-productive. One of those times is when you are meeting with a mortgage lender.
Here are 5 things you should not say during that meeting:
- “Please don’t tell my spouse what you find on my credit report.”
A statement like this can wave a couple of red flags for a lender. The first, of course, is whether your credit report is going to reveal an inordinate amount of debt. Of course, a lender can’t make that promise, because it all has to go on your credit application. And unless the loan will be in your name alone, your spouse will need to read and sign that application.
The second red flag will be about the state of your marriage. The lender can’t discriminate against you because he or she has doubts about whether you’ll still be together a few months from now, but they may look more closely at other issues because of it.
- “I’m still working on getting my down payment together.”
If you make a statement like that, complete it by telling the lender what toys you’re selling or what investments you’re cashing in to come up with the money.
Lenders want to see that you have something to lose should you default on your loan. With that in mind, they want assurance that none of your down payment funds are borrowed – either from a friend or relative or from, for instance, a cash advance on a credit card.
Banks do allow borrowers to use gift monies, but they must present proof that the money was a gift – and the giver must provide documentation to show that they could afford the gift.
Down payment fraud is second only to income fraud in lending scams, so lenders are careful to verify the source of down payment funds.
- “I’m a little concerned about getting the right insurance coverage on this house.”
While you definitely should research insurance availability and costs before purchasing a house, this is not something to discuss with your lender. You’ll have to present proof of insurance before closing, but don’t send up any red flags during the approval process.
- “We aren’t going to be able to move in right away. There’s a lot of work to be done first.”
You don’t need to give your lender a reason to reject your house or to reduce its value. They’ll call for an appraisal, and that’s enough.
Don’t mention the inspection report or what negotiations you did before coming to agreement. Otherwise, the lender may request more inspections or assurances that the house isn’t about to fall apart.
If you are able to do those repairs and will gain a nice chunk of sweat equity in the process, that’s wonderful. So just be quiet. Do the work and smile.
- “I’m sure glad the seller agreed to sell me the hot tub on the side.”
With this one you not only should not talk about it, you should not do it. You‘ll be required to sign a document at closing stating that no money has been exchanged between you and the seller outside of the closing.
Making a deal like that and not disclosing it constitutes fraud. So if there’s something you want that was not included, have your agent write it into the contract and include the payment in the price of the house.
- “I’ll be so glad when this loan is closed so I can quit my job.”
Again, your lender has to look at your situation as it is or will be on the day of closing. But revealing your plan to reduce your income will make him or her look very closely at every other detail in your transaction.
You may have a very good reason for quitting. Perhaps you’re starting something you believe will bring in even more money. Perhaps one of you is going to do more overtime so the other can quit a hated job. It doesn’t matter. I’m sure the plan does not include immediately defaulting on your loan. So – just keep your mouth shut.
