The 5 Most Common “Mortgage Killers”
Sometimes a homebuyer or refinancer can create an unintended self-inflicted financial wound that can lead to their mortgage application being denied. Here are the 5 most common “Mortgage Killers”:
1. Changing employers or leaving a job to open up a business: Changing one’s job and income just prior to applying for a mortgage is never a good idea since a career change or employment gap or becoming newly self-employed could prevent the lender from using one’s income to qualify. Always check with your Lender first before making any job changes.
2. Applying for new credit/opening new credit: Adding new debts and credit inquiries can lower your credit score which can negatively impact the interest rate. Adding new debts can also jeopardize one’s ability to afford the proposed new housing payment.
3. Make large purchases such as real estate, cars, or furniture. This can take away cash assets and reserves needed for the mortgage as well as make the debts too high to qualify for a mortgage.
4. Co-Signing loans. Even though someone else is supposed to make these payments, a co-signed loan will show up on a credit report, is considered one’s debt and can negatively affect one’s credit score if opened recently or if a payment was paid late. This can add additional debt which may make you ineligible for a mortgage.
5. Making home improvements (if refinancing). Lenders are typically prevented from lending to a property currently undergoing significant home renovations.
When applying for a mortgage, it is always best to avoid doing any of the above mentioned events. If one of the events will likely happen, always discuss any possible changes to income, assets or credit with your Mortgage Professional prior to any of these events to make sure it does not “kill” your chances of obtaining a mortgage.
Carey Lance Hollander, NMLS # 74044, has been helping buyers fulfill their Dream of home ownership for 23 years.
Carey is the Armonk Branch Manager for GFI Mortgage Bankers, Inc., 914.307.3600 / [email protected]