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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rescinded.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…
- 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).
- 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.
- 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.
- 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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