4 Life Changing Events That Could Delay Your Mortgage Loan Approval
Owning a home is a dream for many people. However, to achieve this dream one requires financing. The only ready option for many people is a mortgage. For lenders to approve your mortgage, there are conditions you need to meet, but there are life changing events that can interfere with the approval process.
1. Decrease in Your Monthly Income
Just having a job is not enough to qualify for a mortgage these days. And many lenders want you to not only have a certain percentage of your income to cover your mortgage, but to comfortably have a cushion as well. If your salary were to decrease, this could delay your mortgage approval in that you may need to look for a lower priced home.
There are several factors that can lead to a decrease in salary, and some of them include receiving a pay cut or just have a poor paying job. When you apply for a mortgage, lenders verify your main source of income has not changed. If it decreased since the initial application, or it's too low from the start, it will interfere with the approval process.
2. Changes in Credit History
Credit history plays an important part when it comes to mortgage approval. Lenders rely on the credit rating amongst other factors to know what they will award the borrower. Credit history is derived from different sources such as credit card usage, student loan repayments, and other revolving monthly debts.
When your credit rating reduces, the chances of a mortgage approval reduce. This is because the lender will feel that you are not a credible individual to lend money to.
3. Changes in Your Job
Sometimes a good career change opportunity may come your way. As great as you think this may be, it may not always align with your lender's idea of a steady income. You see, if your new job is such a radical change, this is a red flag for lenders.
They may want you to be on the job for longer than a 12-month span to prove you can keep the job and income. For instance, someone who's been an entrepreneur for the last ten years may have an issue obtaining a mortgage with a recent transition into the corporate environment.
4. Marital Status Change
It often takes time to find the home of your dreams. However, realtors and lenders are pushing mortgage pre-approval. This is a wise criteria. However, if during a years' time you have not found your home and your relationship fails, you could have an issue with your final mortgage approval letter due to a change in the household income.
While going to court, you need to think about any potential child support or spousal support payments you may need to make. If it's ruled in the other spouse's favor, and you are still looking to get a home, this may reduce your income initially placed on the mortgage application. It could be in your best interest to hold off on the divorce.
The above four life-changing events could delay or stop your mortgage approval altogether. It's best to analyze things before making any drastic changes.
To learn more, contact a company like Dynamic Mortgage Concepts Inc.