There are several important factors you should consider before you refinance your mortgage this year, including current rates and your financial situation.
As a borrower your loan approval is never final until the process is 100% complete and your loan funds.
Mortgages have many moving parts any one of which can derail your loan application and cause major heartache.
Some aspects of the loan process are within your control and others are not.
Being aware of some potential pitfalls can help avoid issues down the road.
What Many Mortgage Articles Don’t Say
Most mortgage articles give the same advise like avoid buying a car before closing, or don’t open new credit cards prior to closing, but there are more uncommon factors that can lead to a similar loan turndown.
As an example, a home with safety issues is a huge red flag for lenders and can derail a purchase or refinance transaction. Even a minor safety issue like a missing or broken railing on a deck can be enough cause problems.
Broken windows, plumbing issues, dry rot, electrical code violations and/or major foundation damage are all deal-breakers with a lender. This is a problem for a couple of reasons.
First of all, a home in bad condition likely will have trouble getting a home insurance policy. Insurance providers may not want to take on the risk of a home in poor condition. And without a home insurance policy, the lender may likely not approve a home loan for a property that is uninsurable.
Secondly, the home may not be appraised high enough for mortgage approval. If the buyer agrees to pay a certain amount for a home and needs a specific loan amount to cover it, the lender may not approve this loan amount if the appraisal comes in lower than the sale price.
These types of issues have to fix the home prior to your loan closing or the loan won’t close.
Mortgage Red Flags
Below are some additional items that lenders will question:
- Self Employment income declining (If your income is lower in recent years than in previous years a lender will require further explanation as to the reason for the decline).
- Your tax return shows large non-reimbursed employee expenses
- Employment gaps or changes in your line of work
- You have large deposits that cannot be sourced
- Rental income is not properly reported on your tax returns
- Failure to file returns even when no taxes were due
Despite improving market conditions the current lending environment is still conservative. It is important to have a discussion with a mortgage professional well in advance of applying for a loan.
Increase Your Odds of Mortgage Approval
The best way get approved for a mortgage is to know the rules before you start to play. Call us today at 425-401-8787.
And the best way to know the rules is to speak with your trusted mortgage professional today!
Ready to Apply For a Mortgage in WA, OR, CO, or ID?
Do you have questions about home loans? Are you ready to apply for a mortgage to buy a home? If so, Sammamish Mortgage can help. We are a local mortgage company from Bellevue, Washington serving the entire state, as well as Oregon, Idaho, and Colorado. We offer many mortgage programs to buyers all over the Pacific Northwest, and have been doing so since 1992. Contact us today with any questions you have about mortgages.