One of the first steps to buying your Philadelphia home is to talk to a mortgage lender and get a pre-approval. But once you have that shiny new pre-approval, it does not mean that you will automatically qualify for the mortgage. Part of the strength of your pre-approval depends on the thoroughness of the chosen lender’s process but a lot also depends on you the buyer. Choose your lender carefully and before making any changes in your financial life run them by your lender.
- Change of Employment: Depending on type of financing you are obtaining, there are certain requirements for length of consistent employment. It is possible to change jobs and still get your mortgage but it’s important to check with the lender before making that change.
- Change in Salary: Of course if you get a raise all is good. If bonuses and commissions play a part in your salary and you’re making less than your expected, this could be a problem. Ditto with hourly employees. We have seen buyers work less hours when getting ready to move and this has negatively impacted their year-to-date earnings and also their DTI (dept-to-income ratio).
- Negative Item on Credit: You don’t need perfect credit to buy a home but there are specific credit score guidelines that each type of mortgage will have and that each lender will have. It’s important to know and understand your credit score. This is not the time to pay any of your bills late.
- You Acquire More Debt: It’s very important that once your are pre-approved and on your way to home ownership that you take on any more dept even in the form of new credit cards. Do not buy furniture for that home that you don’t own yet!
- Requested Documentation not Given to Lender in Timely Fashion: In today’s mortgage world lenders require all kinds of documents from the buyer. Ideally you should find out what documents you will need as soon as you get pre-approved that way you will be ready to supply them to the lender as soon as you find “the house”. And be prepared to send some of them more than once, that’s just the way it goes. Many times the lender’s processor will call me and ask that I light a fire under my buyer, that they are not getting everything they ask for.
Here is a quick checklist of mostly things not to do before applying for that mortgage.
- Don’t take on additional lines of credit
- Don’t increase your debts
- Don’t make any large deposits into your bank accounts without having proof of where that money came from
- Don’t transfer money between accounts (if you do you will have to supply even more paperwork)
- Do continue to save money in case your closing costs are more than originally estimated
- Do provide all requested documentation when asked for, even documents that you’re sure you have already sent.