Planning Your Own Mortgage Funeral

Planning your own mortgage funeral? Looking for a last minute embarrassing surprise and a mortgage denial?

But wait, what about that preapproval I received from my bank? You already said I was approved, so why do I suddenly not qualify for my mortgage?

All I can say is, "if I had a dollar for every time I heard these questions from a buyer, I'd be a wealthy man". If you'd like to plan for your own "Mortgage Demise", then choose a lender that only takes a casual look at your pay stub or W2 without analyzing all the schedules of your prior 2 years tax returns. Items such as Unreimbursed Business Expenses, Auto Mileage Expenses, losses from Other Entities or Real Estate, etc. can and will impact the allowable income an underwriter will use to qualify you for the mortgage.

What about a casual look at your bank statements to certify you have enough cash for the down payment and closing costs? Here's another trouble area, as current guidelines require a borrower to explain, source and document every deposit on their bank statement for the prior 2 months. The inability to source deposits to the lenders satisfaction will get you denied.

How about that casual look at your credit report? Sure, in the loan officers mind they saw a 750 credit score and calculated all the borrowers outstanding debts into their debt-to-income ratio, or did they? What about that recent inquiry on their credit report? Oh, they went out and purchased and financed furniture or appliances for their new home and it hasn't reported to the credit bureau yet. No big deal? I think not, as guidelines require all inquiries to be explained and documented. Now the new furniture or appliance payment must be calculated into the borrowers debt ratio and now they don't qualify.

What about that 401k loan you are planning on using for your down payment? Even though you are borrowing the money from yourself, guidelines require the repayment of the loan to be calculated into your debt-to-income ratio and now they don't qualify.

By now, I'm sure you understand the message and the importance of working with a lender that will examine your required documentation thoroughly upfront at the preapproval stage of your mortgage. This step alone will save you and all parties involved a lot of time, money, embarrassment and stress.

Working with a committed and experienced lender with an eye for detail may just save you from a last minute surprise and emotional let down. Select a competent lender to work with, or you may be planning your own mortgage funeral.

Harvey Collier - Home Loan Consultant - MortgagePro-Florida.com