Sunday, December 26, 2010

St Louis Mortgage: 3 Things That Could Kill Your Loan Closing

By Floyd Tapia

Your family has located the home of their dreams. You have your lending already taken care of and so you move ahead with signing a contract. But to your chagrin, you find out there will be delays at the closing table and wonder why is this happening to you?

In many cases, you may have changed your "borrower circumstances" between the day you applied for that St Louis home loan and the day you were suppose to close.

Banking requirements are strict at this time due to the losses on Wall street and the foreclosure dark cloud that continues to loom over the financial market.

Lenders and banks are not required to closely watch any type of changes that may occur with a borrower's ability to qualify for the home loan they are seeking from the time of the application to closing.

This could inevitably mean delays at the closing table due to this rigorous and time consuming enforcement which was enacted to protect the FHA and of course banks.

Many experts are concerned and have stated that any possible changes as regards a borrower's ability to re-pay a loan could affect and delay the transaction at the closing table.

Thus, we will discuss 3 important areas a borrower should watch for before proceeding to the closing table:

1. Maxing out your credit cards

After you complete your home loan application, do not go out and start using your credit cards. This is one of the biggest reasons why closings are delayed. Consider paying cash for items in lieu of using your credit cards.

Keep in mind that St Louis loans are approved based on your current debt-to-income ratio. Lenders take a close look at your debt payments compared to your income. If this debt is too high, your chances of being approved go down considerably.

Since lenders now re-check your debt-to-income ratios prior to closing, make sure you do not commit any of these mistakes otherwise you may not be getting good news at the closing table.

So as many St Louis finance experts will tell you, be patient and wait to buy those new appliances or electronics for that new home.

2. Applying for a new credit card or car loan

If you really want to ruin your chances of a smooth mortgage closing, simply go out and make one of the biggest and unintelligent mistakes many borrowers make and that is getting a new credit card or auto loan especially without discussing this with your loan officer or banker.

This can create a huge unnecessary mess because when Fannie Mae discovers the undisclosed auto loan or new credit cards that have been used, they may make the original buy back the loan as a bad mortgage and you may be held accountable for any financial losses to this lender.

To make sure that the consumer is not financially negligent, the bank will do a last minute credit check to see that everything is still in order with you finances. Any changes and your home loan application will be denied.

3. Changing place of employment

Stay at your job until you done with your closing. Repeat. Stay at your current job. This avoidable mistake could make the huge difference between moving into that new dream home or being told there is a delay at closing.

And do not change how you are being paid at work. If you are on salary, stay on salary until after you complete your home loan closing. You will be thanking me for these tips when you are moving into your new dream home.

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