COMMON MISTAKES THAT KEEP YOU FROM QUALIFYING
- Purchase a big ticket item or open a new credit line during the process of refinancing or purchasing. Don’t buy a car, truck, appliance or anything else on credit during the application and processing of your loan. It will most assuredly cause problems and can result in the disqualification of your loan. At a minimum it will create delays which could cause your rate lock to expire.
- Change of Employment. Industry standards typically require a two-year employment history in the same line of work. If after the application process is started and you were to change, jobs the verification of employment from your new employer may cause delays of the funding of your loan. It is not advised that an applicant for real estate financing change careers during the loan process. Typically, a change in the type of work or line of work causes the loan to be declined until a 24-month history is established.
- Large Deposits. Lenders are required to verify the source of larger deposits into accounts used for the qualification process. Gifts from family to be used for down payments may be allowable for some loan programs however, delays caused by the discovery of large deposits may allow your interest rate lock to expire. If the deposit resulted from new credit obtained during the loan process, it may cause your debt to income ratio to exceed the guidelines resulting in your loan being declined. Disclose all related deposits to your lender at the first opportunity and supply supporting documentation verifying the source of funds.
- Late Credit Payments during loan process. Any derogatory credit experienced during the process of financing creates a red flag and may cause your loan to be declined. Skipping a house payment during the loan process that becomes 30 days or more delinquent is a common issue in the financing industry. While it is acceptable to add 30 to 60 days of interested during the refinance process, never allow your mortgage or any other credit payment to become delinquent. Most loan programs do not allow 30-day late payments within the most recent 12 to 24 months.
- Closing Credit Lines during the financing process. Credit is based in part on the applicant’s available credit versus the current balance of the credit line. If you close an account it may reduce your credit scores.