4 problems that could ruin your mortgage
Follow these tips to ensure your home purchase goes smoothly.
Banks are getting very cautious about home mortgage loans these days — right up to the closing date. Even consumers with good credit and plenty of cash may find themselves out on the sidewalk if any of these last-minute loan application issues pop up.
To make sure you’re on the right end of a mortgage closing, follow these four pieces of advice:
Avoid any major purchases before closing your mortgage loan. Some homebuyers think that just because they have a mortgage deal all lined up, the deal is done. Not so. Banks have been known to pull mortgages when the homebuyer buys a new car or makes another major purchase. To banks, such purchases suggest more debt for the homebuyer and more risk for the banks. Avoid any big-ticket items until after you’ve signed on the dotted line. That goes for cash deals, too. Banks also check out your cash reserves when they approve a loan.
Don’t make any big career changes. Lenders also weigh your salary and job stability when evaluating home loans. Any career move you make could jeopardize your home mortgage loan. At worst, the bank could pull the loan. At best, it could delay the process until you demonstrate your new job is a stable one that guarantees you’ll have the financial resources to pay off your mortgage debt. That’s especially true if you change industries.
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Prepare for a last-minute credit check. This is related to point No. 1, but with a twist. With new rules initiated by Fannie Mae’s loan quality initiative, which went into effect June 1, banks and lenders will likely make a second credit check right before closing. So if you miss any credit-card payments or are late on a mortgage payment between the time you were approved for a mortgage and the actual closing date, you may be putting your new home purchase in jeopardy. Even applying for a new credit card can trigger a credit-score inquiry, which could reduce your credit score and threaten your home loan.
- MSN Money: Unused credit cards can hurt you
Watch out for closing-cost surprises. Some homeowners put every last penny into the mortgage down payment and don’t leave enough to pay for closing costs. That could be a big mistake. Closing costs can be as much as 3% of the cost of a new home — that’s $6,000 for a $200,000 property. Worse, closing costs are dynamic and can change all the time. If you don’t have cash set aside to pay more for mortgage rate points or on closing fees than you were anticipating, you could lose the home.
For help on better understanding home mortgage costs, check out this guide from the Federal Reserve.
You would THINK these things would be obvious, but they aren't. I had one client who moved a large sum of money from his business account into his personal account a week before closing. NOT good. Another went out and charged a huge amount on their credit card on new furniture for that new house. Another went out and bought a new car. NOT good.
Common sense? Not to everyone.
I am currently in the process of buying my first home. I am using a mortgage broker and my mortgage commitment date is November 18th. The problem I am having is getting an appraiser to actually accept the appraisal of the property. Its been over two weeks since my broker has ordered the appraisal and 4 appraisers have been given the job. All have turned it down saying that it is in a rural area and there is nothing to compare to. I have no idea what i can do to help the situation. It is driving me nuts knowing that the date is pushing closer along with the chances of losing the house if we dont have commitment by the 18th. My broker tells me that it wont be a breech of contract. But i am still nervous and my agent doesnt seem to think it looks good. Please let me know if you have any advice or help to offer.
Really, if you needed this advice than you are one of the stupid people that already lost your house. Why would you make such a huge purchase and then ruin your credit before it is done, even quit your job or not know you were going to owe thousands in closing costs.
I thought this article would have something useful for serious homebuyers.