Surefire Ways to Derail a Home Mortgage Closing

Surefire Ways to Derail a Home Mortgage Closing

The housing market is flooded with great deals and mortgage interest rates are at all time lows; but if you’re one of the many looking to get a piece of the latest housing deals, you’ll need to be prepared to prove you’re a substantial mortgage candidate. Because of the emotional rise in mortgage delinquencies in past years, lenders have had to really tighten their belts and examine every applicant due to Fannie Mae’s Loan Quality Initiative that went into effect June 1st.

The Loan Quality Initiative requires lenders to keep track of any “changes in borrower circumstances” between the receipt of the mortgage application and closing. During this time frame, any fluctuation in the applicant’s financial situation will raise red flags and possibly ruin the chances of closing.

Read on to learn 3 most shared mistakes mortgage applicants make when attempting to acquire a loan to ensure you avoid these slipups.

Applying for New Debt (Credit Cards and Auto Loans)

Think twice before taking on new debt. Sure, it may be tempting to apply for your favorite store’s credit offer and save 20% on your buy, but this small savings can derail your mortgage application course of action.

Mortgage professionals are now required to check your credit before closing, so applying for a new credit card or loan while your mortgage application is being processed may consequence in major approval delays.

Racking Up Excessive Debt

Another big mistake buyers make is accruing excessive credit card debt while in the midst of being approved for a home loan. Though you may be eager to shop and start purchasing fancy to furniture to fill your new home with, fight the urge.

Charging up credit cards with thousands of dollars worth of items, whether it be goodies for your new home, or a vacation, is a surefire way to derail a closing. If the ratio of debt payments to income is too high, you, the borrower, could be turned down for a mortgage.

Changing Jobs & Pay Change

A change in jobs and or a change in the way you’re compensated for your work could possibly muck up your chances of getting that mortgage.

Lenders need to see a substantial history of employment and income. If you just recently started a job in a new field and industry or if you switched from a steady salaried position to one where dominant income comes from commissions or bonuses, lenders may have a hard time classifying you as a good candidate for a home loan. The more stable your position and your income, the more likely you’ll be approved for that loan.

Though it’s a bit tougher to qualify for a mortgage, it’s not impossible. Work closely with your mortgage specialized to learn more about the mortgage product that best fits your current financial situation.

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