Safeguarding Your Mortgage Application Takes Commonsense

By Bridgette Fanucchi Published Nov 8, 2007 04:54 pm Updated Feb 3, 2015 11:22 am

There are several factors that affect the real estate market as a whole. These factors can make the national market swing upward or downward. One is the employment expansion/shrinkage in the job market; secondly, is the availability of money to consumers; thirdly, is the size of the real estate inventory. When all of these come into alignment, you have a killer market that nothing can stop.

When one gets out of kilter, it can make the market stall, shrink or halt no matter how strong the other two. It’s a three-legged table, as it were. This is why even though you’ll hear the stories nationally about real estate, it’s not a national phenomenon. In the past year, 13 states have seen home sales price appreciation of more than 5 percent (National Association of Home Builders), as well as the number of home sales beating out the year before.

Real estate, like politics, is local. So before you get excited or scared about a particular housing market, look and analyze what’s going on locally to make a decision. With that said, there is a factor in preparing for a home purchase that both buyers and sellers have complete control over. Nothing about interest rates, inventory or employment will affect this factor — it’s called personal control.

There are more and more stories these days of buyers who have come forward to invest in their personal dwelling, but blow their own financial status because of a few missteps.

Just like a point man in a platoon who is plotting out the path for his team, when he comes up to a threatening position, he puts up his hand to signal for everyone to freeze in place. This is the position a buyer should take once s/he has put in a contract on a house and it’s been ratified, and the loan application is in position — pre-approved and ready to go forward.

Don’t move. Don’t switch your credit cards to another cheaper, no payment until next year offer. Don’t open new lines of credit in preparation for remodeling your new purchase. Don’t buy a new car, truck, van, motorcycle, RV, go-cart, etc.

Once your application for a mortgage has been approved and the lender has agreed to finance your purchase — your financial situation is in the middle of a balancing act. Don’t tip it. Even if you think it’s a good move — don’t do it. Even if what might make sense for you personally, financially, the move could cause a financial traffic jam.

A case occured last week where a buyer thought he would offer a larger down payment amount to make his application stronger — a few days before settlement. Not a bad idea, is it? Put another $10K down, save a $100 per month — that’s $1,200 per year. Huh-uh. No. Don’t do it. Once the earlier loan was canceled and the new loan opened, the backup halted seven closings that were waiting for the first purchase to go to settlement and start the domino effect.

That little financial move, as harmless as it may have sounded, made seven more people a little upset.

Then there was the purchaser who decided to get ready to redecorate her new condo by opening lines of credit for decorating, home improvement, etc. You guessed it; those little lines of credit tipped the scale just enough to delay her home purchase for several months.

The mortgage purification we’ve recently experienced has been good for real estate. At least we know now that when a buyer walks in with a pre-approval, they really do qualify. Just don’t be one of those who has a good income, great credit, but a hair-brained idea that could possibly ruin your deal.