5 Common Mistakes That Ruin Your Chances At Homeownership
5 - Unreported Debts
If you have unreported debts, the underwriters will find it out! Reporting your debts can be the difference between a loan approval or a loan denial. There are a few cases where your debts will not automatically appear on your credit report. Things like child support, alimony, and timeshares are good examples of debts that may not be reported. However, they still need to be included in your debt-to-income ratio! It's better for us to know about the debts ahead of time and structure the loan around them. You may very well lose the loan when the underwriter finds out about the debts later and you no longer qualify for the mortgage.
4 - Co-signing Debts
Many parents want to help their children out with student loans, car loans, and other debts, so they co-sign. Unfortunately, when you co-sign, the debt will show up on your debt to income ratio even when it is not your debt! When you co-sign, you are acknowledging responsibility for the debt, so lenders must take that debt into consideration. If you are looking to qualify for a mortgage, do not cosign for your children. If you’ve already cosigned, look for a way to remove yourself off the debt.
3 - New Debts
When you are going through the mortgage process, please do not acquire any new forms of debt–no new credit cards, no new cars, no lay-aways, no new credit! Even if you think it might be helpful in the long run, the new credit may balloon your debt to income ratio to the point where you can no longer qualify for the mortgage. Watch out when buying any products that can be financed. For example, a car, boat, camper, television, or even furniture for your home. If you did not buy it entirely out of pocket, it will show up on your credit report and the new debt can be the difference between getting approved and denied.
2 - Changing Compensation
Be careful if you are in the process of getting promoted since this may change your pay structure. For example, if you are receiving an hourly wage and transition to a commission pay structure, you may not qualify for a mortgage. If you receive commission income or have a 1099, we need to see at least 2 years’ worth of history with that income. Then we take the average of those 2 years to get your monthly income. So if you switch from W2 to commission, 1099, or self-employed income, you would have to wait at least 2 years to get a mortgage.
1- Job Changes
The biggest way to ruin your chances for a mortgage is that you get a new job. You may think that getting a new job will give you a greater chance since it might increase your income, but lenders see a job change as a risk. Please do not switch jobs until you close on your new home. It will do you more harm than good, so please just wait until we close on the loan.
If you are looking to get a mortgage or are in the mortgage process, please avoid these 5 mortgage mistakes. The best way to ensure a smooth mortgage process is to avoid these top 5 mistakes at all costs! Please talk to a mortgage professional before making any major decisions.
If you have any questions about the mortgage process or would like to start a loan application, please contact Chissell Mortgage Group at (727) 376-6900 or go to our website https://www.chissellmg.com.
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