Not only do would-be homebuyers have to be concerned with their credit scores and their income, but they should keep an eye on five other factors that could affect their ability to secure a mortgage, MortgageLoan.com reports.
Are you in the midst of a divorce? According to the website, most lenders refuse to issue a loan to couples who are undergoing a divorce. Fearful that a one-person income would affect a homeowner’s ability to make payments, most lenders are reluctant to lend money to potential homebuyers, the article said. Would-be homebuyers beware: Do not attempt to hide the fact that you are undergoing a divorce, MortgageLoan.com reports. Most institutions will find out during a background check. If this happens, homebuyers will definitely be turned away and could face charges of mortgage fraud for lying on the mortgage application.
Did you recently switch careers? Potential homebuyers who changed careers within the past two years may find it difficult to secure a mortgage, MortgageLoan.com said. Lenders are wary of issuing mortgages to people who are not yet established in their careers, even if a person is earning more in a new job than in his previous occupation, the article reported.
If homebuyers are thinking of switching careers, MortgageLoan.com advises against the move until after a mortgage has closed, or you may face the prospect of starting over. And, if for any reason a potential homebuyer has been unemployed, he will probably have to work in a job for at least two years before he can qualify for a mortgage.
Are you a party in a lawsuit? It may be difficult to secure a mortgage for potential homebuyers who are either plaintiffs or defendants in a lawsuit, according to MortgageLoan.com. Lenders fear that defendants may get whopped with a hefty settlement that may make it difficult to pay monthly mortgage payments. On the other hand, plaintiffs who lose their cases may get stuck with pricey attorneys’ fees, MortgageLoan.com reported.
Are you making repairs on your existing residence? Lenders are hesitant to provide mortgages to borrowers who are in the midst of repair work on their homes, even though that work may increase their home’s value, according to MortgageLoan.com. Because repairs may never be completed and could take any amount of time to end, banks prefer to see finished repair work before issuing a new mortgage.
Did you recently take on new debt? Lenders do not want to see a borrower’s debt-to-income ratio at any more than 43 percent of monthly income, according to MortgageLoan.com. Taking on new debt, such as a car loan, could increase a potential homebuyer’s debt to levels above the bank’s comfortable debt-to-income ratio. The site suggested that it is best to wait to make new purchases until after securing a mortgage.