Will Buying A New TV Keep Your Home Closing From Happening?
The ability to purchase a home depends on your financial stability, plain and simple. One of the biggest challenges for Realtors today is getting a buyer through the loan process. Proper planning and organization is critical to obtaining a mortgage. Basically, buyers are “guilty” until you can prove that you are capable, and lenders, underwriters have the right to waive you on to a successful closing and home-ownership, or to stop your efforts dead in your tracks. Obtaining a home loan today is not easy. If you are using a government backed loan, there is a whole other set of rules that must be followed. Credit will be pulled a day or two before closing – after the initial application. If anything has changed that throws off a buyer’s debt to income ratios or credit scores, they may not be able to get their home loan, despite any previous “approval.”
After years of bad home loans given to under-qualified home-buyers, Fannie Mae and Freddie Mac tightened their lending practices in hopes of preventing further collapse of the housing market, Lenders began looking deeper into not just a borrower’s ability to pay, but their willingness to pay and their ability to show financial stability. Buying habits, accounting records, budgeting ability are all factors an investor might look at when debt to income ratios or credit scores are borderline and decisions must be made. Whether a first-time home-buyer or a repeat buyer, habits, knowledge and experience count when buying a new home.
There’s also that thing called human nature, that sometimes gets the best of home-buyers. Getting caught up in the excitement of buying a new home, thinking of all the things they want for their new home and resisting the urge to purchase, by credit card or credit arrangement, appliances, furnishings, etc. It’s not advisable and can ruin your ability to qualify for your loan at the last minute. Here Are 5 Things That Will Keep You from Closing:
- Applying for Store Credit, Credit Cards, Automobile Loans, Furniture Loans, etc.
- Changing Jobs before closing
- Losing a Job before Closing, or yes, even Getting a Raise Before Closing
- Incomplete or Conflicting Tax Returns
- Bad Check (Overdrafts) Charges in Your Bank Accounts
Changing a job, especially if it is not in your field, may affect your loan. Lenders require you to be “stable.” In their minds, stability means you are not starting a job in uncharted, unfamiliar or unpredictable areas, such as, a job you have never done before or have no experience in. If this happens, let your lender know immediately!
Losing or quitting a job can be devastating, in more ways than one. But verification of employment is done near the end of the loan process, and frankly, you need to have income if that is what your loan is based on! If this happens let your lender know immediately!
Normally, getting a raise is wonderful news! Not, however, if you are using a loan and receiving down-payment assistance monies to close. Those are income based, so if your new raise now means you are making more money than you did when you first applied, you may no longer qualify for that assistance! Before accepting a raise, speak to your lender! It’s critical. If you can delay the raise, that may be what you need to do. Ask your lender!
If your tax returns are not consistent with audits, reviews, and what IRS has on file, you can loose your loan. Lenders have the right to pull your tax returns, if you have amended a return in the midst of your loan, your lender needs to know immediately. Filing a return during your loan process is something you must report to your lender!
Pre-qualification procedures require bank account statements. If you are a borderline borrower, you may be asked for more than three months bank statements and those statements must prove you have no overdraft charges or bank fees. Less than stellar bookkeeping can prevent you from proving that you manage your money well.
All these things are important. Keeping good records, learning good management skills early on, years before you apply for a home loan, will help prove to lenders that you can manage a mortgage for years to come. A good loan officer is critical to the process of getting your home loan closed.
If you’d like to work with a team of professionals, people to guide you through a very important financial decision making process, please call on us. We work with home buyers daily, some for years, planning and preparing for home and investment purchases. For your home-buyer orientation appointment and pre-qualification, Contact Us today. More for Home Buyers on our website!