If your mortgage approval has been stalled, you may be wondering what went wrong during the application process. There are factors that everyone should avoid to keep the mortgage application process on track. Here are five tips you should follow to avoid your mortgage approval from being stalled.
Your Job Status
An important factor to consider while applying for you mortgage is your job status. When applying for a loan, it’s best not to change jobs during this time, as this can severely impact your chances for a mortgage approval. If you lose your job or have to take a leave of absence, make sure you inform your lender. Any recent job changes may signal a red flag to lenders as an indication of a high-risk lender.
Credit Score
This may go without saying, but when going through the mortgage approval process, it’s important to keep your credit score as high as you can. You may think if you pay your credit cards on time that it won’t negatively affect you during the home buying process, but this isn’t always the case.
Your credit utilization makes up 30 percent of your FICO score. This means if you have high balances on your credit cards, it’s not only going to hurt your credit score, but also your chances for approval. Try to get your balance under 15 percent of the limit to get the best credit score before applying.
Credit Card Disputes
Mistakes on your credit report can happen. If you notice any errors and you’re considering to dispute it, you should wait until after the mortgage approval process. Your lender may not approve your mortgage until the dispute is settled, which can take up to 30 days. So, if you want to avoid stalling your application, you should check your credit score annually. Doing this will help you fix any credit errors before applying for a loan.
Making a Big Purchase
You should never make a big purchase during your mortgage application. Before you close the deal, your lender is going to take a look at any outstanding debts you have. If your lender notices any large purchases or if you open a new credit card, it could potentially affect your chances at approval.
Debt-to-income ratio is one of the top factors lenders look at. One purchase can make a difference for your mortgage approval. While waiting for your loan to clear, avoid purchasing anything such as a new TV, furniture or opening a new credit card.
Not Providing the Right Documentation
Providing the necessary documentation for your mortgage when meeting with your lender is very important for your loan application. You are going to have to provide documentation of your finances, which may include:
- Pay stubs
- Two years of tax returns and W-2s
- Explanations and paper trails of all deposits and withdrawals above $1,000
- Home insurance quote
- Information about any additional homes/businesses you own
Ken Venick
Phone: 443-471-4310
kvenick@equitymortgagelending.com