Home loans fall through for all kinds of reasons, especially when homebuyers don’t realize how their spending and saving habits affect the loans they qualify for. Here are some tips to help your new home purchase go smoothly.
1. Don’t make large purchases or acquire additional credit lines
If you buy new cars, furniture or home appliances, open new lines of credit or make any other large purchase, your debt-to-income ratios will change, which may hinder your ability to qualify for your home loan. It is important to be economical, particularly through the house hunting and home loan process. Save those purchases for later, after your loan has closed.
2. Don’t change jobs
A change in compensation or job industry may affect your ability to qualify. Soon before closing, it’s not uncommon for lenders to call your place of employment to verify that you still work there and have the same job title that’s listed on yourloan application.
3. Do keep a paper trail
Keep documentation of any large deposits into your bank accounts. It’s important for you to have copies of all paperwork necessary to prove a financial transaction, including all checks, deposit slips, loan paperwork, forms to liquidate assets, etc. If you can’t source a large cash deposit that is in your bank account, that money can’t be counted toward loan eligibility.
4. Don’t co-sign
If you co-sign with anyone to obtain a line of credit or make a purchase, it will show up on your credit reports as an additional debt. This means the amount of the monthly payment will be included in your debt to income ratio, which may impact your ability to qualify for a loan. If you’ve co-signed with someone else already, but the other person has made all the payments, it is sometimes possible for lenders to remove this debt from your DTI ratio, but only if there is a paper trail available from that other person proving that they have made all the payments for at least the last 12 months.
If you have any questions about steps you can take to make the home loan process go as smoothly as possible, give me a call! I’m here to help.