No Major Purchase of Any
Kind
You see, when determining your ability
to qualify for a mortgage, a lender looks at what is called your
"debt-to-income" ratio. A debt-to-income ratio is the percentage of your
gross monthly income (before taxes) that you spend on debt. This will
include your monthly housing costs, including principal, interest, taxes,
insurance, and homeowner’s association fees, if any. It will also include
your monthly consumer debt, including credit cards, student loans,
installment debt, car payments,
etc.
Even if you
feel you can afford the debt,
mortgage companies approve your mortgage based on their guidelines, not
yours. Do not get discouraged, however. You should still take the time to
get pre-qualified by a lender.
However, if you have not already bought
a car, remember one thing. Whenever the thought of buying a car enters
your mind, think ahead. Think about buying a home first. Buying a home is
a much more important purchase when considering your future financial well
being.
Do not make the purchase. Buy the house
first.
Don’t Move Money
Around
When a lender reviews your loan package for
approval, one of the things they are concerned about is the source of
funds for your down payment and closing costs. Most likely, you will be
asked to provide statements for the last two or three months on any of
your liquid assets. This includes checking accounts, savings accounts,
money market funds, certificates of deposit, stock statements, mutual
funds, and even your company 401K and retirement accounts.
If you have been moving money
between accounts during that time, there may be large deposits and
withdrawals in some of them.
The mortgage underwriter (the
person who actually approves your loan) will probably require a complete
paper trail of all the withdrawals and deposits. You may be required to
produce cancelled checks, deposit receipts, and other seemingly
inconsequential data, which could get quite tedious.
Perhaps you become exasperated at
your lender, but they are only doing their job correctly. To ensure
quality control and eliminate potential fraud, it is a requirement on most
loans to completely document the source of all funds. Moving your money
around, even if you are consolidating your funds to make it "easier,"
could make it more difficult for the lender to properly
document.
So leave your money where it is
until you talk to a loan officer.
Oh…don’t change banks,
either.
Should You Change
Jobs?
For most people, changing
employers will not really affect your ability to qualify for a mortgage
loan, especially if you are going to be earning more money. For some
homebuyers, however, the effects of changing jobs can be disastrous to
your loan application.
