Your family has located the home of their dreams. You have your lending already taken care of and so you move ahead with signing a contract. But to your chagrin, you find out there will be delays at the closing table and wonder why is this happening to you?
In many cases, you may have changed your “borrower circumstances” between the day you applied for that St Louis home loan and the day you were suppose to close.
Due to the mortgage fiasco that has put this country into a deep recession, banks and mortgage lenders have gotten stricter as for as their requirements for lending.
Fannie Mae has been no exception to this rule. This mortgage behemoth’s ‘Loan Quality Initiative,’ which went into effect June 1, requires all lenders to closely follow “changes in borrower circumstances” between the time of the initial application and closing.
This move was designed to add further layers of protection to the FHA and banks but could also mean time consuming delays for potential home owners when it comes time for closing their loan.
Many experts are concerned and have stated that any possible changes as regards a borrower’s ability to re-pay a loan could affect and delay the transaction at the closing table.
Hence, here are 3 things that home owners should look at closely that could adversely affect their closing:
1. Credit cards being maxed to the hill
When you are waiting to close on your new home, leave the credit cards at home. Going out and charging up credit cards is another guaranteed way of messing up your smooth closing. Consider paying cash until everything is finished with your mortgage closing.
Consumers have to realize that no emotions go into approvals or denials from a bank. They crunch numbers by looking at your debt-to-income ratio or what debts you have compared to your income. If your debt is too high, you probably will be turned down for the home loan you seek.
Once again, Fannie Mae strongly encourages lenders to recalculate debt-to-income ratios right before closing. Keep in mind that it is getting tougher for many to even get a new home loan so why ruin what could be a day of celebration.
Remember, those new appliances or new car can and should wait until after your closing has taken place.
2. Applying for a new credit card or car loan
This is where consumers need to use common sense. If you apply for a new home loan, then do not go out and apply for new credit cards or that new car loan. This will wreak havoc on your credit scores which will delay your closing. Talk to your mortgage professional first before you ever proceed.
Fannie Mae will certainly go over past documents and when they discover the undisclosed auto loan, the lender who made the loan will have to buy it back as a bad mortgage and thus lose money.
That will no longer happen. They will at the last minute do a new credit check and turn you down due to your financial negligence. This also applies to a new credit card whether or not you use it.
3. Changing jobs
Stay at your job until you done with your closing. Repeat. Stay at your current job. This avoidable mistake could make the huge difference between moving into that new dream home or being told there is a delay at closing.
Also, don’t change how you are paid. That means don’t go from a salaried position to a commission with huge bonuses. Do this after you close on your home.
If you and your family want the best St Louis mortgage, then visit www.StLouisRefinancingGroup.com to get the best St Louis home mortgage advice on a St Louis finance home loan for you and your family. Or call us at 314-334-0210.
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