Common Mistake #1: Making Large Deposits

Did you get a check from Grandma as a gift? Have you been saving tips or cash in a jar? After applying for your home loan, do not deposit your mattress stash in your bank account! Why you ask? Well, lenders require all funds deposited in your bank account to be sourced. For example, if you deposit your paycheck, they can verify it by looking at your recent pay stub. If you deposit $5,000 dollars in cash that you had buried in your backyard, it won't fly with the lender. Just remember any deposits must be able to be verified and sourced.

Common Mistake #2: Opening New Lines Of Credit

Thinking of getting a new car loan? How about opening a new credit card? Don't do it! While your mortgage application is reviewed by the underwriter, hold off on obtaining new lines of credit until after the loan has been approved AND funded. Obtaining new lines of credit can squash your deal and prevent you from getting financing for your home. This is because your debt to income ratio can change dramatically thus eliminating you from getting approved!

Common Mistake #3: Not Disclosing Property That Is Owned Free & Clear Or Financed With A Private Loan

Oh yeah...I forgot about that! Sound familiar? Well, don't let it happen to you! If you have a property that has a private loan, not shown on your credit report, once the lender gets wind of this it may cause delays and could potentially kill the deal. Even if your property is owned free and clear, you still have property taxes and insurance, so this must be accounted for when reviewing your application.

Common Mistake #4: Declining Commission or Bonus Income

If your employer pays you a base salary plus commission/bonuses that have been declining through the years, it may dramatically change the outcome of your application. For example, let's assume 2 years ago you made $10,000 in commission, and 1 year ago you only made $2,000 in commission. Since the commission income has been declining, the lender will only use your base salary because your declining commission structure is too uncertain for them to consider it guaranteed income.

Common Mistake #5: Not Disclosing Un-reimbursed Employee Expenses

On your tax return documents, Schedule A Line 21, there is a little thing called Un-reimbursed Employee Expenses. If you have an amount on this line in your Schedule A, the underwriter will have to deduct this from your income. For example, if you make $100,000 per year gross, but have $30,000 in Un-reimbursed Employee Expenses, then you actually didn't make $100,000, but $70,000 because you were responsible for those expenses. This brings down your annual income and may affect your debt-to-income ratio.

If you have any questions, we are here to help! Please call LifeSource Mortgage @ (949) 492-2252. Your Orange County Mortgage Specialist!