During the approval process of a mortgage, a mortgage broker is studying all of the key aspects of all your finances. A mortgage broker looks at a snapshot of your employment to see if you are in a stable position within a well-established firm. In addition, a mortgage broker is inspecting your level of income to verify the mortgage-seeking person’s ability to gain capital to repay the mortgage. Finally, a mortgage broker is observing past repayment schedules and judging the hopeful home buyer’s credit score, or their ability to repay lenders.
During this process, there are many occurrences that can delay or ultimately end a mortgage client’s chances at receiving a mortgage. I will provide five things to avoid during the mortgage approval process in order for you to have a better shot at mortgage approval:
- Avoid Making Significant Purchases: Whether a major purchase is done with cash or a credit card, a major purchase can delay or deny a mortgage application. For example, if a client buys a brand new flatscreen TV during the mortgage approval process with cash, the mortgage broker will see that the client now has less money for a down payment. On the other hand, if the flatscreen TV is bought with credit, the purchase will alter your debt-to-income ratio and quite possibly lower your credit score. A new TV for the new home can be purchased after approval after your finances are all aligned.
- Avoid Falling Behind on Bills: A mortgage broker is observing your credit score. Even if your credit score is perfect when you finish your proposal, you must keep up with all of your payments. An overdraft or a missed payment would immediately delay approval as it showcases to the mortgage broker an inability to repay.
- Avoid Leaving or Changing Jobs: A mortgage broker determines the stability of both you in your company as well as the stability of your company. For example, working at the Central Bank as a Loan Manager showcases more stability to a mortgage broker than working as a Sales Representative for a brand new, startup Pharmaceuticals company. However, leaving or changing jobs completely showcases very little stability to a mortgage broker. A mortgage broker would have to delay approval in order to see the level of income you would receive at your new place of employment and wait to see your first paycheck.
- Avoid Opening a Form of New Credit: Opening a new form of credit, such as applying for a new credit card, can affect mortgage approval for two reasons. The mortgage broker would have to wait and observe whether the new credit card is verified and that the mortgage applicant can pay back the loan. In addition, opening a new credit card can lower a credit score. During the mortgage process, a lower credit score could increase the loan interest rate of the mortgage. Therefore, the process could be delayed and the mortgage payments could increase.
- Avoid Cosigning Loans: Cosigning on loans can be very dangerous as both parties are considered liable. Both people on the loan can have their credit harmed if significant debt is not paid off. For a cosigned loan, both parties’ ability to pay off the debt would have to be presented to a mortgage broker. However, cosigning loans will have to be included in the mortgage applicants debt-to-income ratio, and if there is significant debt that is not paid off, a mortgage broker may delay or even deny a mortgage application.
Although these may seem simple, these are five actions to avoid during the application process as these occurrences can delay or deny your mortgage proposal. Keep these in mind after filling out a mortgage application with Yes.ie.