How to Lose a House in 10 Ways

By
Mortgage and Lending with First Heritage Mortgage NMLS #: 938761

True or false? All’s fair in buying and selling.

how to lose a guy in 10 days

All of us remember the 2003 hit rom-com with Kate Hudson and Matthew McConaughey, How To Lose a Guy in 10 Days.  Andy Anderson (Hudson), Composure magazine’s how-to girl, is writing an article about the things women do to ruin their chances with men: talking about marriage and children too soon, calling them by embarrassing pet names, moving into their medicine cabinet, crashing poker night, etc.  She picks advertising executive Benjamin Barry (McConaughey) as her test male, however, Ben has just entered a bet to make a woman fall in love with him in 10 days.  Only in the movies, folks.

We all know how the movie ends–they end up falling in love despite Andy’s numerous attempts to sabotage the relationship.  If only it worked like this in the Richmond, VA real estate market.  Unfortunately, there aren’t always happy endings when buyers aren’t prepared for the underwriting process and inadvertently sabotage their chances of homeownership.

Even though you have been pre-approved, if you don’t follow your lender’s and Realtor’s tips, you could end up losing your house before you sign on the dotted line.  Here are 10  ways to lose financing on your dream home:

How To Lose a House in 10 Ways

1) Open New Lines of Credit | Lenders must adhere to strict debt-to-income ratio requirements.  If you add a new car payment or credit card payment to the mix after you have been pre-approved, you debt-to-income ratios may now be too high to qualify for the proposed housing payment.

2) Run Up Balances on Current Credit Cards | Even if you don’t open new lines of credit, charging a substantial amount on a current card will raise the minimum monthly payment on that card your lender is using for financing.  Again, this could mess with your debt-to-income ratios.

3) Spend Down Payment Funds | Even if your lender verified down payment funds prior to your pre-approval, if your balance decreases to less than what you will need at closing and your lender requires new bank statements, this could cause a major delay in your closing date.  If you’re closing on a short sale with a hard deadline, you could end up losing the house if you cannot close in time and aren’t able to obtain an extension.

4) Lose or Switch Jobs | Not much explanation needed here.  If your qualifying income is no longer coming in every month, closing on your house isn’t going to happen unless you have a co-borrower who can carry the payment on his or her own.

5) Make a Late Payment on Your Credit Report | If your credit score is barely meeting the minimum threshold, one late payment could knock you out of the qualifying range.  If your credit score expires before closing and your lender needs to repull credit, then you would be in trouble if this has happened to you.

6) Failure To Communicate Alimony or Child Support To Your Lender | This information is important and will affect the amount for which you qualify.  If it comes up too late in the process, there’s a chance you could lose the house, so please share this information with your lender, even if he or she doesn’t ask.

7) Failure To Communicate You Are in the Market for a Condo | If you are purchasing a condo, the lender must factor in condo association dues, which can be very pricey.  If your lender isn’t factoring a cushion for this into your pre-approval, you may find out that your debt-to-income ratios are too high once you are already under contract.

8) Getting a 10 Minute Pre-approval | Yes, I know you’re busy, but getting a pre-approval shouldn’t be a 10 minute process.  Obtaining a mortgage loan is very complicated and your lender should spend time interviewing you, learning about your employment history, and reviewing the standard documents required for a mortgage pre-approval.  Just because you are supposed to receive court-ordered child support doesn’t automatically make that money qualifying income.  A lender must be able to show a history of receiving these payments on time.  If not, the underwriter will not allow us to use the income.

9) Failure To Communicate an Employment Gap | A lender should ask for your two-year work history upfront, and, if a large employment gap arises that your lender was unaware of, you could have issues if you don’t have a good letter of explanation.

10) Failure to Submit Lender-Required Documentation| Your lender may ask you for documentation several times throughout the process–in order to make sure he or she can submit your story to underwriting in a timely matter and close you on time, you must be available via phone and email to respond to these requests in a timely manner.  If you aren’t, your loan won’t make it to final approval, and you will not be able to close on your home.

How Do You Make Sure This Doesn’t Happen To You?

How can you be sure you won’t sabotage your own chances of closing on your dream home? Make sure you speak with a mortgage advisor who is knowledgeable, skilled, and thorough enough to make sure you’re not scaring underwriters away with your credit history, bank statements, and employment history.  A skilled loan officer will not conduct a 10 minute pre-approval or send you out to search for home without explaining closing costs and how to get to the closing table with ease.

At First Home Mortgage, we give all of our borrower this Avoiding Mortgage Sabotage handout early in the game so that there are no surprises during the processing and underwriting of their loan.  Feel free to contact me with any questions on how to make it from the first date to the chapel with your next home.  Also, if you are already under contract and your mortgage financing is falling through, check out this post: What To Do If Your Mortgage Financing Is About To Fall Through.

 

This post was originally published at Loan Officer Lately.

Comments (68)

Bob Crane
Woodland Management Service / Woodland Real Estate, EXP - Stevens Point, WI
Forestland Experts! 715-204-9671

Great post Whitney, hopefully this advice will save a few closings from last minute failures.

Oct 05, 2014 04:52 PM
Beth and Richard Witt
Long Island Cash Home Buyer - Center Moriches, NY
Long Island Cash Home Buyer 516-330-6940

What an awesome post and thanks to Pat I didn't miss it... I'm going to put in right on my Pinterest Board... Tips For Buyers.... Happy Day Whitney...

Oct 06, 2014 03:59 AM
Nick T Pappas
Assoc. Broker/Broker ABR, CRS, SFR, e-Pro, @Homes Realty Group, @HomesBirmingham & Providence Property Mgmnt, LLC Hun... - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

Whitney, yes those are all great ways to eaisly lose a house. Lack of communication and opening new lines of credit are at the top of the list for me!

Oct 06, 2014 10:13 AM
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

Your post definitely deserved to be featured. You are so right and each item that you mentioned, has happened to me prior to closing. We give every borrower a list of all the things they should not do, but somehow, they sometimes forget.

Oct 07, 2014 05:05 AM
Sharon Paxson
Compass - Newport Beach, CA
Newport Beach Real Estate

Good Morning Whitney - this is an excellent post with the 10 ways to lose a house, should be shared with buyers who are getting a loan!

Oct 08, 2014 03:48 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

This is excellent for prospective mortgage borrowers.

Thanks for sharing your tips.

Oct 09, 2014 07:01 AM
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

I will schedule this for a re-blog on Friday morning.

 

Oct 09, 2014 07:05 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

That all makes sense and are things any buyer should avoid doing in order to avoid loosing the house.

Oct 13, 2014 06:54 AM
Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

These are great points for buyers to keep in mind. The big thing I see is buyers going out and buying a new car. Ouch...that hurts them and me. 

Oct 17, 2014 07:10 AM
Michael Dagner
Brokers Guild Classic - Denver, CO
Your Denver Homes Realty Expert

Very thorough list.  Excellent!

Oct 17, 2014 01:18 PM
Tammy Adams ~ Realtor / Podcaster
Maricopa Real Estate Co - Maricopa, AZ
A Maricopa Agent who Works, Lives & Loves Maricopa

Tell them, tell them again, and then tell them again. LOL.  I want them to never forget and we make it a running joke.   :-)

Oct 17, 2014 03:07 PM
Sussie Sutton
David Tracy Real Estate - Houston, TX
David Tracy Real Estate for Buyers & Sellers

Yes those ten things will kill your chances of getting a home. Great list. 

Oct 17, 2014 03:10 PM
Gayle Rich-Boxman Fishhawk Lake Real Estate
John L Scott Market Center - Birkenfeld, OR
"Your Local Expert!" 503-755-2905

Whitney, wish I'd seen this years ago for a client, as it turned into a real nightmare. The guy changed jobs in the midst of him purchasing one of my listings and AFTER he'd already sold his house...we were stuck. I moved them into the house they were buying and they paid rent and months later, the loan didn't happen--OMG, the seller was a biach and I had to find a place for them to rent within days. BIG LESSON. He was also British and thought that our system sucked...I heard about that, too. 

Got the home finally sold, and boy was I glad to get rid of that seller--one terminally angry white woman!

Oct 18, 2014 10:13 PM
Donny Carter
Carter & Roque Real Estate - Frostburg, MD
Mountain Maryland Real Estate Expert
Thanks for re-posting this Whitney! I would have missed it! What a catchy title and great advice.
Oct 20, 2014 05:11 AM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

What a catchy title and yes there ae this many ways to lose it plus more that I am learning every day.

Oct 20, 2014 06:10 AM
Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

GREAT post! If only clients would listen to the advice they receive from the professionals in this business!

Oct 22, 2014 03:04 AM
Kevin Hancock
Evergreen Home Loans - Poulsbo, WA
The Hancock Mortgage Team

Those are 10 great examples!  This seems to be a popular topic lately... and more importanat than ever.

Oct 22, 2014 07:45 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Very clever way to approach it. I have a similar document called "don't get yourself into a pickle."

Oct 23, 2014 04:31 AM
Lanre-"THE REAL ESTATE FARMER" Folayan
Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

Whitney somebody re-blogged this which is how I found this. Well written post. A must read for home buyers. Thank you very much for sharing.

Oct 27, 2014 04:53 AM
Winston Heverly
Winston Realty, Inc. - Atlantis, FL
GRI, ABR, SFR, CDPE, CIAS, PA

I think going back and reading some of Active Rains best Archives  likes this one should be shared again.

Mar 26, 2015 12:20 PM