Tips to Avoid Mortgage Lending Pitfalls!

With inventory still historically low for homes in the Summerville area, it is more critical than ever to be ready to pull the trigger when you find the home of your dreams. Most homes are spoken for within hours of listing, so time is of the essence. I have seen many homebuyers lose out on a contract, even when they bid the highest, because they can’t get their mortgage funds approved. These are just a few tips from your realtor in Summerville about pitfalls to avoid when applying for a mortgage so that you qualify and get the home you want!

Don’t Apply for Other Loans

If you intend to purchase a home, don’t take out any other significant loans while searching. When you apply for a mortgage, they use a debt to loan ratio to evaluate your ability to repay the loan. It doesn’t even have to be a substantial loan – for some, even taking out a new department store card can put you over the edge. While shopping for a home, place other spending ventures on hold – at least until you sign the papers and get the keys.

Don’t Change Jobs

Mortgage lenders like predictability above all else, so work history is critical. If you make a major job change before you qualify, it could jeopardize your loan. Things like going from a salary to a commission-based income can severely impact your ability to take out a loan, even if you will make more money. If you get a position that is different from what you did before or even move to a new company, lenders get nervous about how long you might stay at your new job. And that could make the whole deal fall apart.

Avoid Fluctuations in Your Bank Statements

Any type of major cash fluctuations in your bank statements can be a red flag to lenders. Excess money that you put in will probably not be calculated, but you should let the lender know. Also, monthly withdrawals or random withdrawals for cash can be misconstrued as a debt that you aren’t claiming. Any large withdrawal is not a good thing when going through the approval process.

Keep Your Lines of Credit Open

It is natural to think that you should limit your credit to show that you have little risk, but closing your lines of credit can make it harder to get approved. When you remove good credit by closing it out, you remove proof of your history of repayment. Pay down any cards that you can to about 30%, and consider asking the credit company for a larger limit. Then the proportions go up and you have a smaller percentage of credit used, which looks good on your report.

Don’t Try to Cover Up Mistakes

Tell the truth. If you have mistakes that you know will negatively impact your approval, let your lending officer know – don’t hide it. Often, mortgage lending professionals can work around small indiscretions and find a way to overcome them. But if you aren’t honest and the underwriters find something that you tried to keep hidden, that is a huge red flag for lenders!

Be Prepared

As many as 75% of first-time buyers will need to do some sort of credit repair to increase their chances of being approved. Before you even begin house-hunting, you should hire a financial consultant to help increase your credit favorability and give you guidance about how to fix your finances.

With inventory so low in Summerville and the surrounding areas, when you want to pull the trigger, you have to be ready or you will likely lose the house of your dreams. Before we sit down and talk about your dream home, let’s talk about where you stand financially, so we know exactly what you can afford and what you can’t. Let Sea Turtle Properties help walk you through the financial complexities of getting a mortgage loan. We are professionals in the industry who are willing to dig in and help get you into the home of your dreams. Contact our realtor in the Summerville office today!

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