Thinking about purchasing a home in Raleigh, Durham, Chapel Hill and surrounding areas? This is a list of things to steer clear of when you are seeking to obtain financing for a home. The following items may prove to be a detriment when you wish to move forward with the loan process.
Lenders look carefully at your debt-to-income ratio. A large payment such as a car lease or purchase can greatly impact those ratios and prevent you from qualifying for a home loan. Your credit is checked later on close to closing and this new debt will show up and it could derail your financing.
Try not to move assets from one bank account to another!
These transfers show up as new deposits and complicate the application process, as you must then disclose and document the source of funds for each new account and large deposit. The lender can verify each account as it currently exists. You can consolidate your accounts later if you need to.
Don’t change jobs!
A new job may involve a probation period which must be satisfied before income from the new job can be considered for qualifying purposes. Changing the type of job from wage paying to contract work or commission based when you don’t have a history of it could result in problems as this type of employment is treated differently.
Don’t buy new furniture or major appliances for your “new home!”
If the new purchases increase the amount of debt you are responsible for on a monthly basis, there is the possibility this may disqualify you from getting the loan, or cut down on the available funds you need to meet closing costs. Again, the lender checks your credit right before closing and any new debt may force you to re-qualify at the last minute and could even cause your loan to be denied.
Don’t run a credit report on yourself!
This may show as an inquiry on your lender’s credit report and inquiries may have to be explained in writing. If you do it make sure it is a “soft” inquiry (one that doesn’t show up as a credit inquiry). If you’re unsure, don’t do it.
Don’t attempt to consolidate bills or pay off any accounts before speaking with your lender!
The lender can advise you if this needs to be done. Paying off collection accounts may actually hurt you. It sounds counter intuitive (because it is!) but it can actually backfire on you as it makes the older bad debt more current.
Don’t pack or ship information needed for the loan application!
A common mistake made by individuals who are relocating is to store and pack away important paperwork such as W-2 forms, divorce decrees, and tax returns. Do not have these items shipped with your household goods when you move. Duplicate copies take weeks to obtain, and could stall the closing date on your transaction. Make sure you have access to these items the lender will require.
If you are thinking about doing something during your loan application process and you are unsure if it will affect your loan process, make sure to contact your mortgage professional. The mortgage professionals at FM Lending Services right here in the Triangle can guide you towards a smooth closing. Remember, better safe than sorry!
This post was contributed by FM Lending NC’s Hugh Page. Thanks, Hugh! GREAT advice for first-time home buyers AND wonderful reminders for those who haven’t purchased in a while too!