8 Blunders That Will Absolutely Spoil Your Mortgage Approval
A lot of unhappy faces project through the conference call. Would-be homebuyers, real estate agents, title & escrow and a mortgage team – they all invested something.
Whether it be time, money or both; watching a home purchase explode days before closing is painful.
It’s also expensive for the potential homebuyer and can be a setback that pushes a potential home purchase into next home buying season or beyond.
It can almost always be avoided too.
It all starts with a great team. Choose your mortgage lender and real estate agent carefully so that you avoid human error. That said, their assistance can only go so far and they may not be able to save you IF you make one of these critical mortgage mistakes.
You are welcome to Ignore these simple guidelines, but only if you are fully prepared for the potential consequences.
Eight Avoidable Mortgage Blunders
- Do NOT buy furniture, appliances or other items for your new house – because making large purchases can easily result in you not being able to buy that new house.
- Do NOT buy a new car or trade-up to a bigger lease – even if you are getting a better deal, you can still negatively affect your debt-to-income ratios.
- Do NOT switch from a salaried job to a heavily-commissioned job or a 1099 – in fact, just do not change jobs, period.
- Do NOT bounce a check – seriously, we’re trying to show credit-worthiness here and bouncing checks does not inspire confidence with mortgage underwriters.
- Do NOT transfer large sums of money between bank accounts – unless you like extra documentation and paperwork of course and have no problem delaying the close of escrow.
- Do NOT forget (or stop) about paying your bills — all of them please. Again, we’re hoping to demonstrate credit-worthiness and you never know when the random request for on-time payments for any of your account might be requested.
- Do NOT open new credit cards — even if you’re getting 0% interest and a billion frequent flyer miles. Well, maybe with a billion miles. If you do find that deal, PLEASE let me know.
- Do NOT deposit funds / assets that you cannot document. Even if you think you can document it, check with your Loan Officer before depositing any money other than your paycheck. That absolutely includes gift funds for down payment and/or closing costs – now is not the time for Grandma to deposit $465 cash as a down payment gift.
If you have questions on whether or not an action might affect your approval process, then stop what you are doing before it is too late and call your loan officer.
Can I afford extra cheese on this pizza? Stop and call your loan officer.
Can I afford to add the premium cable package so that I never miss Game of Thrones? Stop and call your loan officer. Make sure you tell him where you are in the Game of Thrones saga to avoid possible spoilers.
Can I quit paying that other mortgage, the one on my old house that is scheduled to close this month? Stop and pay that mortgage, no need to bother your loan officer with a ridiculous question.
For example, if your car lease is expiring, you have to do what you have to do. Renew the lease. Before doing it, though, check with your loan officer — spreading your lease over 60 or 72 months may be better for your debt-to-income (DTI) ratio.
The same goes for accepting cash gifts from parents or god-parents or anyone who is willing to gift funds to you.
There’s a right way and a wrong way to accept a cash gift for a purchase and if you do it the “wrong way”, your lender may disallow the gift and deny the loan.
Most of all, be smart and never take your mortgage loan approval for granted until the ink is dry on your closing documents.