The information you submit on your mortgage loan application should be incredibly accurate. This includes submitting full legal names and addresses as accurately as possible. Here’s why…
Submitting a Loan Application
When you apply for a home mortgage loan, your lender inputs the information you provide them for the purposes of procuring credit. This information if submitted incorrectly can have consequences later on down the road in your ability to obtain credit. It’s all about specifics. If any of the following inconsistencies appear anywhere on your mortgage loan application, make sure to get them corrected swiftly…
Name misspellings– this one is a common. Let’s say your name is hyphenated Mary-Ellen Jones for example and for whatever reason, only the first name and last name is used on the application when pulling credit, Mary Jones. This information is sent to all three credit bureaus via the credit inquiry. The inquiry carries over the inaccurate financial data the loan professional submitted on the original loan application. This can create issues for the mortgage loan because there could be a disparity in the credit score, anywhere from 10 points to as much as 20 points, which is one of the biggest drivers of loan costs and interest rate.
Additionally, name misspellings can create an inaccurate credit history prompting more questions, from underwriting when the loan ultimately comes due for credit disposition. Other times, name misspellings on loan applications, result in less than three credit score. You only need one credit score to get a mortgage, but the more credit scores you have, the more chances you have for the lender to use a better score rating resulting in lower rates and fees. Traditionally, lenders pull credit from each credit bureau, and they attain a high score, middle score and a low score and the middle score is the one is used in conjunction with the mortgage loan application. This of course can be prevented by providing your name to the mortgage professional as clearly and as accurately as possible, consistent with the rest of your financial documentation. If you have a nickname for example or different name you go by that is not your legal name, use your legal name commensurate with your financial documentation, so as to avoid credit issues that could inevitably pop up in the process.
This one creates the same types of problems. Your loan lender is required to obtain a two-year residence history. That means you’ll need to provide to your mortgage professional every address you physically resided at for the most recent last two years. Any previous addresses that have a misspelling or a digit off in the previous address, you guessed it, that inaccurate information if credit is pulled, will be sent to the credit bureaus caring over the previous address information to the credit report. Silly as this may sound, if the mortgage company cannot accurately identify a previous address, that is suspicious, and then loan conditions are added for more clarity. Suspicious activity in the banking world is a hot button topic lenders are required to abide by imposed by the Consumer Financial Protection Bureau (CFPB).
Same advice-make sure your previous addresses are clearly and accurately spelled on your mortgage loan application. Additionally, if the address is spelled wrong or the ZIP Code is wrong or if there is any error or inconsistency in the previous address, occupancy concerns arise which is another red flag item in the lending world as it raises possible credit/default risk.
A.K. A. Name Statement
You can only make sure the information you are supplying conjunction with your application is as accurate as possible for the current credit in which you are currently applying. You cannot fix the past. When you’re signing mortgage loan papers at closing, you’re going to be asked to sign an AKA statement. An AKA statement is a blanket correction in creating name consistency within your loan application. It’s correcting all of the previous name inconsistencies as other creditors have submitted with credit inquiries before in the past when you’ve previously applied for credit.
Mortgage Tip: as long as you are making sure your loan application is consistent with your legal name consistent with your tax returns and W-2s for example, you should have no problems with anything regards to your credit score or credit history or anything address related issues based on inaccuracies. It’s all about making sure the information before credit is pulled is 100% correct, taking the extra step to ensure the i’s are dotted and t’s are crossed, paves the path for the best possible mortgage outcome.
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