The desire to buy a home is all well and good but, unless it’s an all-cash transaction, financial decision-making is critically important!
Post-financial crisis the underwriting methodology and criteria for residential mortgage loans swung in the exact opposite direction from where they had been in the go-go years of real estate.
Before the financial crisis and in the age of anything goes securitization of pools of mortgage loans, ‘Liar Loans‘ were prevalent. The were loans where the borrower could basically provide financial and employment information that would go unchecked. And, in return, they would typically pay a somewhat higher rate of interest.
Appraisers were often selected by the lender and did not always provide 100% accurate valuations, instead coming in at the level necessary for a loan to be approved. In addition FICO scores, or the credit quality of the borrower, did not always have to be stellar in order for them to qualify for a loan.
That was then (pre-2008) and this is now (post-2008)!
Today little leeway will be given to a borrower whose mortgage application contains any nicks or cuts.
That said the following article appeared at the website of longtime mortgage loan originator Warren Goldberg, owner of Mortgage Wealth Advisor’s. And, while the contents of the article may not be new (original author unknown), the tips provided need to be seriously heeded by any potential borrower!
The Ten Commandments
‘Many individuals do not realize that even the slightest change in your finances can delay or ultimately jeopardize your mortgage approval. Most loan officers have seen each and every one of these commandments broken. Unfortunately, many of those loan applicants had their loan denied.
Please take each of these Ten Commandments to heart as you go through the mortgage application process. Your loan approval is at stake!
Ten Commandments When Buying a Home or Applying for a Mortgage
- Thou shalt NOT change jobs, become self-employed, or quit your job.
- Thou shalt NOT buy a car, truck, or van (or you may find yourself living in it!).
- Thou shalt NOT use charge cards excessively or let your accounts fall behind.
- Thou shalt NOT buy furniture with money set aside for closing.
- Thou shalt NOT omit debts or liabilities from your loan application.
- Thou shalt NOT stop paying your rent or current mortgage.
- Thou shalt NOT originate any inquiries on your credit.
- Thou shalt NOT make large deposits without first checking with your loan officer.
- Thou shalt NOT change bank accounts or transfer funds back and forth between accounts.
- Thou shalt NOT co-sign on a loan for anyone.
Any one of these items could result in your loan being denied. Please notify your loan officer immediately if any of these actions were taken after you applied or after your credit was pulled.‘
Warren Goldberg is President of Mortgage Wealth Advisors, a Certified Mortgage Planning Specialist®, and a published author. His interviews include Blog-Talk Radio, Newsday, and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.
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Michael Haltman is President of Hallmark Abstract Service in New York. He can be reached at mhaltman@hallmarkabstractllc.com.
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