Posts Tagged Debt
What Buyers Need to Avoid Doing! | RealtyGo_blog
I keep on saying it and I’ll say it again…. The Mortgage Industry has gone back to the future. Underwriters are looking at loan applications the old way. They are looking at everything.
A 780 FICO score, money in the bank and job . . . Not too long ago if a buyer had two out of three of these, they were almost guaranteed a loan approval. Not any more.
Underwriters are looking at the contents of that credit report, they are looking at the source of the money in those bank accounts, they are looking at the pay checks and tax returns even if the buyer is a salaried employee.
Make sure your clients are prepared and well counseled. Preparation and proper expectations will cure 90 percent of the problems and delays buyers are having in today’s mortgage market.
Below is a list of “rules” all mortgage applicants should follow. It will make their life easier and yours. The only call we want to hear the week of closing is, “Docs are at title and the wire has been ordered.”
Share this with all your clients regardless of who they are.
Things you should avoid before and after making application for your mortgage
Congratulations! You finally found the house of your dreams. Your offer has been accepted by the seller, you have been pre-approved for the mortgage. It looks like you’ll qualify. The closing is only weeks away, and you’re feeling pretty good. It’s smooth sailing from here, right? Probably….
… However, more than one buyer has had the wind knocked out of his sails at some point in a real estate transaction by the mis-steps described below. If at all possible, steer clear of the following until AFTER you have gone to settlement.
These suggestions are merely that—suggestions. No one is saying, flat out, that bad things will necessarily follow if you do any of the below. They are offered as cautions. Many buyers seem to view the mortgage application procedure as a static action, a snap shot of their financial lives at a given moment in time. It’s not. It’s an on-going process that takes into account everything you do right up until the day of closing.
- Do not take on new debt. The temptation is strong. There are so many big purchases that people want to make in connection with a move: appliances, window treatments, furniture, etc. When you add to this the fact that, today, everyone offers easy terms and no money down—well, why not just do it? Answer: because you will change what the mortgage industry calls your “debt-to-income ratios” (the relationship of your income to your debt).
- Do not move money. In preparing for payment required at closing you may be tempted to consolidate accounts. Contact me before you move your money. We may require additional documentation and verification of those accounts. Trying to re-trace your steps can be confusing and delay the process.
- Do not make unusual deposits into your accounts. Unusual or irregular deposits could indicate undisclosed debts. The underwriter will need to know and document the source of those funds. If you do have an odd deposit, make copies of all the documents so that it is easily sourced.
- 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’s a BETTER job, for MORE money, in the SAME field?” Still, try and 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 may delay your closing.
- Do not pack too soon. Well, go ahead and pack your clothes and dishes. But do not pack your bank statements, tax returns, or other important paperwork. Most especially, do not pack 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.
- 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 time between mortgage application and closing! As with any debt, this will change your “debt-to-income ratios” and may cause you not to qualify for your mortgage.
- Do not sell something unless you have proof you owned it. This can go under odd deposits. Discuss this with me before you sell.
In short, do nothing that negatively impacts your ability to qualify for your mortgage loan, or initiates a new round of paperwork. If you have any doubts about doing something that may affect your ability to qualify for your mortgage loan, please consult me before you do it.
Special thanks to Nino Pascale for this email article!
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