Because of recent and ongoing changes in the mortgage marketplace some home buyers are getting left out in the cold. The process of shopping for a home is often a 30 day or more experience. In todays mortgage lending environment 30 days can often mean drastic changes in lender programs and guidelines. With rapidly changing programs and ever dynamic guidelines you should take extra caution when being pre-approved to ensure your home buying experience goes smoothly. Here are tips to ensure your closing is hassle free as well as some pointers on what to do if your loan program is no longer available.
Find out specifically why your loan was denied. Sometimes the property itself may be a reason for denialfor one of many reasons: zoning, condition, or appraisal/appraisal review. Ask your lender to clarify the reasons the loan was not approved and see what if any options remain.
Always brig your financial information so the loan officer can give you an accurate approval. Things you should should bring with you at application are
1. Paycheck stubs for the last month
2. Last 2 months Bank statements
3. Any 401K and/or IRA account statements
4. Name and contact information of your landlord with 12 months
cancelled rent checks
These items should help give the loan officer a good picture of your financial situation and base a purchase price for your approval.
Can you afford to make a larger down payment? Putting more money down decreases the lenders preceived risk and often times can be the difference between a loan approval and a denial. Many programs allow for part of your down payment to be a gift from a family member. Gift funds are an especially popular route for first time home buyers.
Get a co-borrower and take title as Tenants in Common. Make sure your co-borrower has documentable income and good credit. You may also want to draw up a seperate agreement with stipulations on how the property profits (if any) shall be divided when sold.
When you mortgage has been turned down by the lender you should review your information to see if changes can be made. Lenders will look at your credit score, debt to income level and loan to value ratio. Making a change to influence one area may be beneficial when your mortgage has been turned down by the lender.