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Mortgage Financing
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When you're attempting to get a mortgage for your new dream home, you want to avoid potential problems. Here are a few mortgage nightmares to avoid.

Nightmare One: Pile on Those Debts
John was a successful account executive and a newlywed in his late-20s. He had no problem qualifying for a mortgage loan—his credit was excellent and he got the mortgage. But then John did a silly thing. "He went out and bought a very expensive new car and didn't tell me,". "All of a sudden, the day before settlement, the mortgage broker called me and said, 'We can't do the loan.' The recheck on the credit report showed a new $800 payment. He had to get his mother to co-sign for him, which was very embarrassing."

The moral of the story? "You shouldn't take out new debts during the mortgage process, no matter what,"

Nightmare Two: Change Your Job
Bob was the family's breadwinner, but after being pre-approved for a mortgage, he decided he could make more money by becoming self-employed. Problem is the mortgage lender refused to close on Bob's mortgage because he had made a "material change" in his lifestyle and financial circumstances. "I usually warn people ahead of time about changing jobs,". "If they have to, they should always contact the mortgage professional and give them the details. If it's a job in the same field, it's usually not a problem. But if they were employed and think they'll make more money by being self-employed, it could be a problem because they need a track record."

Nightmare Three: That's Not My Debt!
Many people have debts on their credit reports that they don't even know about, but need to be corrected. That's why it's always a good idea to get a copy of your credit report as soon as possible and apply early for a mortgage pre-approval.

"I had one couple I worked with on buying a house for a full year". "They both were successful professionals with double figure incomes. Never in there wildest imagination did they ever think there would be a problem. We found a house and went for a mortgage, and they couldn't get one. Their credit score was very low because they had not been paying their bills on time. They did not think it was such big deal and in fact natural to occasionally pay them a little late. We did finally get a mortgage that was about 5% higher than the regular rate because of that."

I recommend having your credit checked well before you find your home, at the beginning of the home-buying process when you first start house hunting, just to make sure there's nothing you have to work on clearing up.

Equifax
800-685-1111
www.equifax.com
Experian
888-EXPERIAN (397-3742)
www.experian.com
Trans Union
800-916-8800
www.transunion.com

 

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