There are thousands upon thousands of families who experience the worse surprise when buying a home. They get pre-approved for a loan, sign a contract and proceed to the closing table only to find out that they cannot close or delays are in place.
In many cases, you may have changed your “borrower circumstances” between the day you applied for that St Louis home loan and the day you were suppose to close.
Due to the mortgage fiasco that has put this country into a deep recession, banks and mortgage lenders have gotten stricter as for as their requirements for lending.
Fannie Mae has been no exception to this rule. This mortgage behemoth’s ‘Loan Quality Initiative,’ which went into effect June 1, requires all lenders to closely follow “changes in borrower circumstances” between the time of the initial application and closing.
This move was designed to add further layers of protection to the FHA and banks but could also mean time consuming delays for potential home owners when it comes time for closing their loan.
“Any change in circumstance could affect and delay a borrower’s closing on a transaction,” so says David Adamo, the CEO of Luxury Mortgage of Stamford.
So, here are 3 areas where a borrower could really mess up their current or next home mortgage closing:
1. Credit cards being maxed to the hill
After you complete your home loan application, do not go out and start using your credit cards. This is one of the biggest reasons why closings are delayed. Consider paying cash for items in lieu of using your credit cards.
The obvious reason for this road block is that St Louis home mortgage loan approvals are based on debt-to-income ratios. This means that all lenders look at the consumer’s debt payments and then compares this amount to their income. If the debt ratio is too high, you may be turned down for a loan you originally qualified for.
The stinger is that you may have qualified at the beginning but due to FHA requirements, lenders will re-calculate your debt-to-income ratios before the closing and this is when you get the bad news that you may not be closing on your new home.
The best advice to all home owners is wait out those buyer cravings until you are done at the closing table.
2. Going out and applying for a new car loan or credit card
Do not, I mean do not go out and apply for any new credit cards or a new automobile loan. This is also one of the biggest mistakes consumers make while waiting for their home loan to close. If this is an emergency, you must discuss this with your mortgage broker or banker before moving head.
This can create a huge unnecessary mess because when Fannie Mae discovers the undisclosed auto loan or new credit cards that have been used, they may make the original buy back the loan as a bad mortgage and you may be held accountable for any financial losses to this lender.
To make sure that the consumer is not financially negligent, the bank will do a last minute credit check to see that everything is still in order with you finances. Any changes and your home loan application will be denied.
3. Changing jobs
Stay at your job until you done with your closing. Repeat. Stay at your current job. This avoidable mistake could make the huge difference between moving into that new dream home or being told there is a delay at closing.
And do not change how you are being paid at work. If you are on salary, stay on salary until after you complete your home loan closing. You will be thanking me for these tips when you are moving into your new dream home.
When a home owner wants to find out more about a St Louis home loan, they visit Floyd J. Tapia’s site on how to choose the best St Louis refinancing expert for all of your St Louis lending needs. Or give us a call at 314-334-0210.