Possible Financing Issues
Did you know that 30% of all purchase applications are rejected? This is according to the Mortgage Bankers Association. Here are some pitfalls buyers might want to review BEFORE making application!
· Is your spouses credit good as well? Are they going to be able to use their income.
· Have you changed careers lately? A complete change will require some time to verify you can make it in this field.
· Have you started your own business or become freelance? This requires a minimum of two years tax returns to verify income, and sometimes more stringent requirements.
Debt to Income Rations:
· Bonus time and overtime are handled differently, check with your lender!
· Cash wages are impossible to include in your income unless you report that cash income on your tax returns.
· Rental income will be included at 75% usually, if you have listed it on your tax returns, or have a lease signed, and sometimes only if you have previously been a landlord! Check your lenders requirements.
· Usually must have a 620 to 660 score
· Collections and judgments will cause you heartburn!
· Are there foreclosures and short sales near your home? They may be used as comparables and could pull the value of the home you are purchasing down.
· Even if it appraises, the appraiser can list a defect that the lender will require repairing prior to closing, like a new roof!
Complete and Accurate Application:
· It should go unsaid, but an application should have EVERY line filled in.
· It is usually not anyone that knows you reviewing your application for final approval, don’t assume that your personal banker will do the review and knows you, fill it in for a stranger!
Hopefully these tools will prepare you for applying for a new mortgage. It may make a difference in whether or not you are approved and how much you are approved for! This is your first step in the home buying process and one of the most important. Take your time and do it right!
If you are in the market to purchase one of our Bozeman Montana homes, call or email, I would be happy to help you start looking!