5 Ways to Sabotage Your Mortgage Application

Written by Posted On Monday, 16 May 2016 05:25

Are you applying for a mortgage for the first time? While it may seem like an exciting and intimidating process all at once, you shouldn’t let the unfamiliarity of applying for a home loan scare you. Entering the property market is an exciting milestone, and the last thing you need is self-induced stress. Shockingly enough, buyers can sometimes sabotage their own approval – it’s not a done deal once they receive their prequalification letter. Some buyers don’t realize that their actions before and after getting prequalified can have an effect on their mortgage. Take a look at these five common mistakes to avoid:

 

1. Creating New Debt

Do not take on any new debt before closing. That means do not use credit cards excessively, finance furniture or finance a new car. Your mortgage prequalification is based on your income and debt at the time of the application, and creating new debt will add to your debt-to-income ratio, which can result in qualifying for much less. There have been many instances when a borrower failed to qualify for a mortgage because they financed a new car during the process. A new car can reduce your approval amount – forcing you to start the process over and ultimately shop for a cheaper home.

 

2. Skipping Out on Your Rent

If you can’t pay your landlord, it might be an indication that you can’t pay your mortgage. Buying a home is expensive, but it’s not an excuse to stop paying your rent or skip out on your lease. Particularly if this is your first-time mortgage, a lender will communicate with your current landlord – and your previous landlords within the past three years – to learn about your rental history. If they report late payments, broken leases or nonpayment of rent, this could kill your chances of getting a mortgage.

 

3. Job Hopping

While some jobs just aren’t the right fit, lenders don’t like to see borrowers switch jobs every six to 12 months – it shows a sign of instability. Try to hold the same job for two years prior to applying for a mortgage. Once you've been officially approved for a mortgage and you close on the loan, feel free to job hop as often as you want – as long as you make the payments on time.

 

4. Fudging Information and Numbers

Whether it’s exaggerating your income and assets, lying about a source of down payment or the length of time you’ve worked for a particular company, a mortgage lender will verify all of the information you provide on your application. It’s really hard to fudge your income because if your tax returns, bank statements, W-2 forms and the like don’t match your application, you won’t be approved for the loan.

 

5. Not Providing Supporting Documentation

No one claimed that getting a loan was easy – it involves a lot of paperwork. Make sure you keep all tax returns, W-2’s, pay stubs and any other financial papers – lenders will need all of these supporting documents to move forward with the mortgage process. Unfortunately, if you’re not able to provide this information forces your lender to stop the mortgage.

Different factors can derail a mortgage prequalification, so it’s crucial that you avoid decisions that can sabotage your chances of buying a property. Be sure to work with a lender who will help you fully understand your prequalification.

 

Homeside Financial, a privately held mortgage bank, is one of the nation's fastest growing mortgage lenders.

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Grayson Hanes

Homeside Financial, a privately held mortgage lender, is one of the nation’s fastest growing mortgage lenders. Since opening in late 2013, Homeside has grown to over 300+ employees, across 12+ regional locations throughout the Midwest, Mid-Atlantic and Southeast. Delivering home loans in over 20 states, Homeside was just recognized as a Top 100 lender nationally in 2015 and projects to become one of the top 20 purchase lenders in America within the next 24 months. Dual-headquartered in Columbia, MD, & Columbus, OH, Homeside provides an unparalleled modern mortgage experience to its consumers, and a dynamic career path and culture for its team members. For more information on Homeside Financial, please check out www.gohomeside.com or contact us today at media@gohomeside.com

www.gohomeside.com

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