Avoid These 5 Dream Home Crushers!
Dream home meets mortgage application
Picture this: You found your dream home and you’re ready to make it yours. You love everything about it and you’ve already picked out a spot for your favorite chair. You gather the paperwork, sign the forms and apply for your home loan. After what seems like years of nervous waiting, the phone rings and you find out you’ve been denied for a mortgage. Major dream crusher. Don’t let this hypothetical scenario become your reality. Avoid these 5 mortgage-busting mistakes to make sure your dream home becomes a reality.
Mortgage lenders want to see proof of stable income. If you start a new job position shortly before applying for a mortgage, it may look like your incoming money is up in the air. Also, if you’ve just started a new job, you may lack the required paystubs for your mortgage application.
Incurring new debt
One of the points many mortgage lenders consider is your debt-to-income ratio. Taking on additional debt raises the ratio, which works against you. Additionally, taking on a lot of new debt makes it appear that you’re struggling to pay for things you want or need. You want to present to the mortgage lender as someone capable of covering expenses without needing to go in debt to do so.
Closing a credit account
In the opposite direction, don’t close any credit card accounts right before your mortgage application. While it may seem like a great idea to close an account and cut up the card, resist the urge until after you’ve secured your dream home. Decreasing your number of open accounts skews the debt-to-income ratio and can trigger a red flag for mortgage lenders.
Co-signing a loan
Even though you may not think of a co-signed loan as your debt, lenders consider it your debt. Mortgage lenders know that if the other party defaults on the loan, the obligation falls to you. If that happens, it could impact your ability to repay your mortgage loan. Carefully consider co-signing a loan prior to applying for a mortgage.
Making a major purchase
Even if you’ve just married, or are otherwise starting out or starting over, try to avoid making large purchases prior to your home loan application. If you use credit for a major purchase, that can add to your debt-to-income ratio. Using cash for a large purchase can wipe out your savings, leaving inadequate funds for closing costs and other home-related expenses. Keep a little extra savings for the big-ticket items and purchase them after you close on your dream home.
Don’t try to go it alone
The mortgage application and home shopping process can feel a little intimidating, especially for first-time home buyers. Work with an experienced Real Estate professional and reputable lenders to reduce the stress and get the answers you need. Contact me today and let’s make your upstate South Carolina dream home come true. We can help you buy anywhere in upstate South Carolina, including Easley, Pickens, Greer, Travelers Rest, Sunset, Cleveland and surrounding areas. Call 864 214 0311!