Years ago, David Letterman had a late-night talk show that was famous for his Top Ten Lists. These lists came to mind recently as I’ve seen people make simple mistakes that have the ability to knock their home purchase off track.
So, as Dave always said, “Ladies and gentlemen, here’s tonight’s Top Ten List!”
10. Changing Jobs. It’s not necessary to have the same job for years in order to get a mortgage, but it can delay your process by weeks or months if you change places of employment and then underwriters determine they’ll need to see more paystubs from the new job in order to establish employment.
9. Big Purchases. Everyone understands you’ll need some new furniture for your new home, but still, you should wait until after closing to purchase that furniture. You’ll feel pretty awkward sitting on your new patio set in your parent’s basement. While you’re in the home-buying process, it is not the time to buy a new car, boat or camper unless you plan to live in it.
8. Major Life Changes. Major changes occur in life and we often can’t control them, but getting divorced, married or changing your name can be difficult to do during the home-buying process. Decide which is the more important move for you at the time… and make that move first.
7. Change in Income. Getting a raise is fantastic and certainly won’t hurt your process, but a change in salary structure to commission, self-employment or taking a pay cut to have a position with more flexibility may not be the right decision while you’re getting your mortgage.
6. Not listening to your real estate agent. You have a team of professionals helping you get a home, make sure you listen to their advice. Working against your agent’s advice with an unreasonably low offer won’t help get you moved in.
5. Undocumented Gifts. Most loan programs allow you to receive gifts to help with your process. But if you have a gift from someone who is unwilling to help you prove where the money came from (by maybe showing their bank statements), you may find out too late the funds can’t be used! Many times we need to explain to family members that while they supply supporting documentation, we don’t share those details with the recipient.
4. Missed Payments. Getting behind on car payments, student loans, or credit cards can impact your credit report in a major way. Many mortgages are derailed when someone finds out they are in default on a student loan or have an outstanding judgment they were unaware of. You can check your credit report for free every year at https://www.annualcreditreport.com.
3. Big Deposits in Your Bank Account. If you sell your boat or other large item, get a bill of sale so when you deposit the funds, you can show how you got them. This time of year, we always need tax returns to prove (or source) deposits even when they say something like “IRS” on your bank statement. You will almost certainly have to supply your bank statements for a couple of months, so be prepared.
2. New Credit Checks. When you allow your credit to be checked during the process, you can unintentionally delay your home purchase. The credit inquiry will require explanation and may cause your credit score to go down. Filling out an application for a discount at a store has wrecked a mortgage before, don’t let it happen to you.
And the number ONE thing that can knock your home purchase off the track is CASH! We all know Cash is King… except in mortgages. Federal laws make the use of cash a big problem. I’ve had a borrower tell me, “Where I got this money is NONE OF THEIR BUSINESS!” But it is their business. It is literally the lender’s business. You are asking them to loan you hundreds of thousands of dollars to buy a home, your finances are part of the transaction.
These kinds of things are why you need a team of mortgage professionals on your home-buying team. They should be people who see it as their job to inform you so you can make the best possible decision for your family. What you should be looking for is the solid combination of people who care about you, people who know you, who take the time to listen to your goals and help you develop a plan to meet them.
The Matthew Stevens Mortgage Team, powered by Ross Mortgage, has a track record of helping families, whether it’s their first or their forever home. We can help you, too.
-by Craig Davis
About the Author: Craig Davis (NMLS #1950037) is a licensed mortgage loan originator licensed in KY, TN, IN, GA, FL and NC that specializes in helping first-time homebuyer avoid pitfalls like the ones above. You can also hear him weekday mornings on Nash 103.7 from 5-8am. Find him on facebook.com/craigdavisloans or craigdavisloans.com.
Ross Mortgage (NMLS #107716) is an equal housing opportunity lender.
