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5 Traps To Avoid When Getting A Mortgage.  

Heeding This Advice Can Mean The Difference Between Approval and Rejection!


Congratulations!

You have begun the house-hunting process! Soon, you will find the house of your dreams. You will make a bid, and have it accepted by the seller. You’ll have all the inspections done on the house. At some point, you’ll have signed, and re-signed, and initialed, and re-initialed all the paperwork.

Then, you will go through the mortgage application process. You will gather all the information the loan originator wants. You’ll satisfactorily explain all the little glitches and questions on your credit report. It looks as if you’ll qualify. Before you know it, the closing will only be weeks away, and you will be feeling pretty good.

It’s smooth sailing from there, right? Probably. However, more than one buyer has had the wind taken out of his sails at this point in a real estate transaction. This is not a time for alarm, but just a period for a little extra caution. The span between the day you receive the approval of your mortgage from the originator, and the moment they actually give you the money, is a tricky one. Listed here are five circumstances that can affect your ability to close on your loan in a timely fashion. Being aware of these situations can mean the difference between getting your loan or having your approval rescinded.

One more reason to heed these warnings is to make certain you, as the buyer, are not cited for default! Many purchase contracts contain the stipulation that the buyer is in default if he or she does anything intentionally that causes the mortgage to be denied. Default by the purchaser means that the buyer not only does not get the house, but also is liable for damages suffered by the seller.

While Waiting For Your Mortgage To Be Approved…

  1. Do not take on new debt. The temptation is strong. There are so many big purchases people potentially want to make in connection with a move. They want new appliances, window treatments, and furniture, for example. When you add to this the fact that, today, everyone offers easy terms and no money down …well, why not just do it? The answer is that you will change what the industry calls your ‘back-end ratios’ (the relationship of your income to your debt).

  2. Do not change jobs. If at all possible, try not to make a career move during the time between your mortgage application and the closing on the home you are purchasing. “But,” you ask, “what if it is a BETTER job, for MORE money, in a DIFFERENT field?” Still, try to wait until AFTER closing. One of the factors mortgage companies consider is length of present employment; they are partial to stability. At the very least, changing jobs initiates the need for more paperwork, and maybe a delay in closing.

  3. Do not pack too soon. Well, go ahead and pack your clothes and pictures. However, do not pack away your bank statements, tax returns, or other important paperwork. Most especially, do not pack away your checkbook! More than one buyer has had closing delayed while a friend or relative hurried over with additional funds because the checkbook was in the moving van.

  4. Do not lease a new car. This should go under the general heading of “no new debt”. It is highlighted here because, for some strange reason, many buyers do run right out and lease a new car during the intervening time between mortgage application and closing! As with any debt, this will change your ‘back-end ratios’, and may cause you not to qualify for your mortgage.

In short, do nothing that negatively impacts your ability to qualify for your mortgage loan, or initiates a new round of paperwork.

No one is saying, flat out, that bad things will necessarily follow if you do any of the above. They are offered as cautions. Many buyers seem to think of the mortgage application procedure as a static entity. That is, they view the proceedings as a snap shot of their financial lives at a given moment in time. It is not. It is an on-going process that can take into account everything you do… right up until the day of closing.

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