Making Large Purchases While Their Application Is "In Process"
Congratulations. You've been pre-approved for a $350,000 mortgage. It's now November and the loan won't close until January, 2016. If you go out next month and take out a car loan so you can buy a nice new BMW, that could affect your debt ratio. It could cost you your new home. That new credit inquiry could also cause your score to drop.
I once had a couple come to drop off paperwork for their loan in their brand new Range Rover. I told them to take it back to the dealership and return it until after their mortgage settlement.
Being Too Slow in Providing Documentation
The mortgage process can be a complicated one. If you take too long in providing the documentation your lender needs, it could cause your loan to be declined, especially in today's highly-regulated world. In today's world, if your loan officer doesn't have everything he or she needs from you within 30 days, they might have to mark your loan application as "incomplete," decline to request and start all over again.
Not Being Honest about Your Credit History
The loan officer is going to pull your credit report anyway. The more honest you are about what's on your credit report, the easier it will be to explain past issues. If you tell your loan officer, "I've got excellent credit," but then they pull your report and your score is 560, we're going to have a hard road ahead of us, not to mention the fact that you might be a little embarrassed. We all make mistakes. Be up front about them so we can help you bring your score up.
Changing Careers Just Before Buying a House
When buying a house, it's best to have at least 2 years of employment history in the same field. If you spent 20 years in banking, but just last month switched to a commission-only job, it's going to be very difficult to get approved. If you're self-employed or on commission, be prepared to show two years of income history. If you really hate your job and you're thinking of making a switch, try to wait until after your loan closing.
Chris Montcalmo, Greater Baltimore Mortgage Consultant
Mortgage and Lending / White Marsh, MD
Sierra Pacific Mortgage
Office (410) 630-2256
Mobile (410) 812-6854