1. Unstable Work History.
When applying for a mortgage, one of the most important things is showing proof that you can make your payments. Having a stable work history and a stable income is one way to do that. Attempting to get a job with less than two consecutive years in the same occupation or field might affect your chances of loan approval. Any relatively recent gaps in employment are also a red flag in the mortgage process. Avoid changing jobs during the mortgage process as this can affect the loan approval as well.
2. Past Foreclosures or Bankruptcy.
Foreclosures, no matter how old they are, can hurt your mortgage deal. Foreclosures negatively affect your credit score, making it harder to obtain credit in the future. Having a foreclosure on your credit history also means you can expect higher interest rates if and when you do get approved. Numerous bankruptcies can also negatively impact your ability to obtain a mortgage. Bankruptcy seriously hurts your credit score and can stay on your credit report for up to ten years. Managing your new debts and giving your credit score time to improve is the best way to work past this.
3. Non-Sufficient Funds.
To ensure that a borrower has their finances in order and can handle having a mortgage payment each month, the underwriter scrutinizes bank statements. Any non-sufficient funds on those bank statements could raise a red flag in the approval process. Having all of your funds "gifted" to you can also make it more difficult to obtain a mortgage. Proper documentation of any gifted funds is crucial to the loan transaction.
4. High Debt-to-Income Ratio.
In addition to your credit score, mortgage underwriters also take a look at your debt-to-income ratio. One common occurrence here at the Lake of the Ozarks that creates a high debt-to-income ratio is when a borrower tries to keep their current residence while obtaining a mortgage. There are a lot of second homeowners at the Lake of the Ozarks, as this is a top vacation destination in the Midwest. Talk to a mortgage professional to see if your finances, credit score and debt-to-income ratio are good enough to obtain a second home.
5. Late Payments & Open Collections.
One factor that can seriously affect your chances at a Lake of the Ozarks home loan approval is how you manage your debts. Late payments are a big red flag for mortgage underwriters. If you have anything that has gone to collections, your ability to obtain a mortgage becomes a lot more difficult. Be sure to make your payments and do so on time to avoid issues during the mortgage process.
6. Large Increase in Housing Expenses.
Whether you're selling your home and upgrading to a larger one or transitioning from renting to buying, having a large increase in housing expenses is a red flag in the mortgage approval process. If a borrowers payments are near doubling, a mortgage approval is going to be difficult. Again, the mortgage professionals want to make sure that you can handle the monthly mortgage payment - and owning a home comes with more expenses than just the mortgage.
To discuss your current situation in detail with a mortgage professional at the Lake of the Ozarks, call 573-746-7211. When it comes to your Lake of the Ozarks home financing needs, I'm committed to working with you every step of the way.
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Senior Loan Officer
NMLS #: 493712
4655 B Osage Beach Parkway
Osage Beach, MO 65065
Cell: (573) 216-7258
**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.