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Watch Out for these Mortgage Application Deal-Killers

15 Aug

house-of-cardsThe mortgage process can be a lot like a house of cards. It is carefully, and painstakingly put together to build the perfect structure – or in this case, an approved loan. Then just as the ink is drying on your final loan papers, someone pulls the virtual card (aka deal killer) from the bottom and whoosh! – the house of cards and your loan come crashing down. A mortgage loan approval is never final until it’s funded.

Mortgages are made up of many moving parts, any of which might “go wrong” while your home loan is underway. We get so focused on getting the best interest rate, and we forget there is much more to this process than picking a loan officer, locking your rate and waiting 30 days till you close. 

Watch Out For The Deal Killers

Some are in your control, like deciding to buy that new appliance on credit during the mortgage process, many more of these deal killers are not. These “not in your control” items are the ones that you may not be thinking of, and just being aware of some potential pitfalls could help save your loan down the road, and your peace of mind today.

Many mortgage related articles offer similar bits of advice, like don’t buy a new car before closing, don’t apply for that new Macy’s card, don’t quit your job (I know this seems obvious, but I have clients who have done this before!), or plan a vacation the week you are planning to close, but there are  more uncommon factors that can lead to a similar loan denial.

For example, a loan might get denied if the home you are buying is found to be unsuitable, or unsafe, for human habitation — a condition you may not discover until after a thorough home inspection’s been made.

Broken windows, lack of plumbing, major electrical code violations and/or major foundation damage are all deal-breakers with a lender.

You’ll either have to fix the home prior to your loan closing, or don’t close at all.

More Mortgage Pitfalls To Avoid

There are others ways in which a mortgage approval can go bad, too:

  • You’re self-employed and your income was declining over the years leading up to your mortgage application.
  • You forgot to tell us about that side business you have making candles, and you write-off thousands of dollars in losses every year – yup, we will have deduct this from your current income calculation and all of a sudden – you don’t qualify for the loan.
  • You have an old tax liability you have forgotten about and never paid.
  • Maybe you have an old school bill from 20 years ago that you didn’t pay and it never showed up on your credit report. Guess what? Underwriters will find them.
  • The underwriter see’s a recent large deposit that can’t be sourced. OR worse yet, you borrowed the money from your credit card, thinking you can use this as down payment or closing cost – Nope! These “borrowed” funds are considered unusable for this purchase.
  • Your tax return shows large amounts of unreimbursed employee expenses.
  • You have switched lines of work or had unexplained breaks of employment in recent years.
  • You are separated from your spouse, but not legally divorced and you fail to mention this bit of information on your application. Then at the end of the escrow, it is uncovered that you are indeed married – This could derail your approval.

Mortgage approvals are delicate and, despite an improving economy, lenders still operate with caution. Talk with your real estate agent and your loan officer and put together a game plan.

The best way to beat the mortgage system is to know the rules before you start to play.

And the best way to know the rules is to speak with your trusted mortgage professional today!

 

For More information please contact Dan Tharp @ 916-257-1470 or email Dan at dtharp@Guildmortgage.net

 The information contained in this training has been prepared and distributed for educational purposes only.  This training information shall not be construed as a guarantee of loan approval; All loans are subject to underwriter approval.

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Posted by on August 15, 2013 in Mortgage Tips

 

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