Common Mistakes People Make When Applying For A Mortgage
A lot of people get overwhelmed with all the complicated terms used by agents and lenders when it comes to obtaining a mortgage. This misunderstanding could lead to you not filling out your forms properly, not giving in the proper documents and even buying things on credit without you realizing that it can affect your credit score.
To help you avoid a situation like this and steer clear of some basic errors that could prove to be costly, DoctorLoan.com has put together a list of the most common mistakes people make when applying for a mortgage and how to avoid them.
1. Changing or quitting jobs
Changing jobs may not be a deal-breaker, but having a conversation with your loan officer prior to any change is advised. If the change brings a lower income or different pay structure, this could negatively affect your loan prospects. It all depends on the lender’s acceptance criteria as some mortgages are only available if you’ve been in your job for many years. Changing your job makes it riskier for the lender to give you the finances you need as you might not be able to pay back the money eventually if you lose your job. Contacting a mortgage broker makes it easier to get access to exclusive deals as they know which lender will likely give you a mortgage even if you have recently changed or quit your job.
2. Buying new items on credit
Car loans, credit cards, new furniture, etc., can impact your debt-to-income ratio and therefore cause your loan to be denied. Even in a best-case scenario, there will be additional paperwork required by the underwriter to document the payment arrangement for these new items. In very few cases, this is unavoidable but having a conversation with your loan officer before you make any of these purchases is essential. It is just as easy to obtain these items after closing. Keep in mind co-signing for another individual for a car or house will also be included in your debt-to-income ratio for at least the first year of a loan. Co-signers would be required to provide twelve months of documentation showing the primary borrower has made the payments before those payments can be removed from an applicant’s debt-to-income ratio.
3. Not being completely transparent about your income
There’s no point in embellishing how much you make or leave out details that may impact your financing. There are several methods underwriters use to verify income information. They will find the truth. Many times that truth comes out well into the financing process, which means appraisals and inspections have been paid for. Earnest money deposits are at risk. Save yourself the money embarrassment of getting declined after you are already under contract to buy a new home.
4. Not documenting your assets
Any assets used to qualify for a mortgage must be documented with at least two months of bank statements. Any assets added to those accounts will have to be “sourced” or verified. If money is transferred from one account to another, then two months of the original account will also need to be provided. Money cannot come from sources that aren’t able to be documented. It is possible that gifts from a family member are acceptable, but be sure to have a conversation with your loan officer prior to accepting gifts. These must be transferred in an acceptable manner.
5. Not keeping up with your payments
Be sure to keep up with all your payment during the mortgage process. Especially your rent/current mortgage. Oftentimes it is a requirement to verify your rental or mortgage payment history. If you fall behind during the immediate period prior to financing a new home, that could speak to your ability to maintain a new mortgage payment.
To avoid these and other mistakes, reach out to the experts at DoctorLoan.com. We are a free, web-based service that connects physicians and dentists to specialized mortgage professionals and lenders who are well-versed in providing loans to medical professionals. That way, they can follow their medical dreams without worrying about how to finance their accommodation. As online service providers, our mortgage services are available throughout the lower forty-eight states.
Our team specializes in mortgage loans for physicians, doctors, dentists, and resident physicians across Orlando, Miami, Tampa, Jacksonville, Fort Lauderdale, Palm Beach, St. Petersburg, Naples, South Florida, Houston, Dallas, Austin, San Antonio, Texas, San Diego, Los Angeles, San Francisco, California, Atlanta, Georgia, Charlotte, Raleigh, Greensboro, North California, Charleston, Columbia, Greenville, South Carolina, Richmond, Virginia Beach, Norfolk, Arlington, Washington DC, Virginia, Baltimore, Annapolis, Silver Spring, Maryland, Philadelphia, Pennsylvania, New York City, New York, New Jersey and anywhere in the United States.
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