If you are thinking about buying a property within the next year, there are particular mistakes that you should avoid as they will limit your loan options. The following are MA buying mistakes to avoid.
MA Buying Mistakes To Avoid
Significant Expenses
Lenders review your income compared to your debt. Increasing debt on either your credit cards or with new loans may dramatically alter that ratio. Generally, the more debt you have, the less you will qualify for on a home loan. This is particularly critical after you have under agreement to purchase a home. Lenders will re-check your credit report immediately prior to closing to ensure that your figures has not significantly changed. If you built up new debts, this can result in you not being qualified to buy the home.
Changing Jobs
As part of the mortgage process, lenders review your previous and present earnings to analyze your ability to pay back the mortgage. Consistency in earnings is very important. Changing jobs prior to or during the mortgage process may cause problems with qualifying for a mortgage, particularly if the new job is in a separate field or at a lower rate of pay. During the mortgage process, it can also lead to delays while the new employment is verified.
Changing Banks
Mortgage processors usually evaluate your bank account statements over the last few months. Moving funds to a new institution can create delays. It is recommended that you keep funds in the current location until after the closing.
Cash Deposits
Most types of mortgages mandate that you use a certain amount of personal money for the down payment and/or settlement fees. Mortgage companies verify this by reviewing bank statements. Any cash deposits are carefully reviewed. You may be asked to verify the source of such deposits.
Closing Accounts
While getting ready to purchase a home, you may decide to pay off debts. Prior to doing this, consider consulting with a mortgage professional on whether this is necessary given your financial standing. If you do pay off bills, do not terminate the accounts as this may reduce your credit rating. It may be better to keep the accounts open with no balance.
More Advice on MA Buying Mistakes To Avoid
The above MA buying mistakes to avoid covers just a few examples. As a local loan officer with Emery Federal Credit Union, I canassess your finances and provide information on other actions to avoid before applying for a mortgage. Contact me, Christopher Graves, by phone at 978-376-5389 or email at christopher.d.graves@gmail.com.
