Posts Tagged ‘pre-approval’

Charlotte Home Loan Dies over $25

“But it was only $25.00. Surely that can’t matter that much!” Unfortunately, it did.

Recently a client of mine went from being approved to buy a home in Charlotte to being denied for a Charlotte mortgage loan. It was over a $25 credit card payment. Unfortunately, the payment on one of their credit cards was not paid on time and the late payment was reported to the credit bureau. This late payment caused their credit scores to drop significantly, enough to disqualify them from the mortgage they had applied for.

The amount of your monthly payments has no bearing on the significance of the payment history. It does not matter if the monthly payment is $1,000, $100 or $1. If there is a payment due and it is not paid on time, it is reported as late. A recent late payment will hurt your credit rating and your score will suffer because of it. Most mortgage companies in Charlotte and across the country are looking very hard at credit. It is more important than ever.

If you are considering buying a home in Charlotte, make sure that every obligation you have is paid on time. If you think it is insignificant, pay it anyway. The last thing you want to experience is what this client did… it can be very heartbreaking. And delivering the news isn’t fun on my end either!

Joe and Susan wanted to buy a home in Charlotte. They spoke with a loan officer and began the credit application. Joe had been on his job for just over a year, and Susan almost a year. 

John went on to explain that he had worked for Widgets Inc for 6 years, but got caught up in downsizing. After losing that job, went to work for Wares LTD and has been there for about 14 months. Susan worked for Dr. Bones for 3 years, but when he retired, she went to work for the Miracle Hospital and has been there for 10 months. Their loan application was signed and a closing date was set.

As the processing of the loan got under way, the lender approved the mortgage loan and all that was left was final verification of employment dates. With that done, the excited couple could soon get the keys and move in! But wait… uh oh… we have a small problem.

Duirng the final verification of employment, Widgets Inc reported back that Joe had left in August of 2006. Wares LTD’s records have Joe starting his job with them in Jan 2007. As well, Dr. Bones reported that Susan had left his employment in Feburary of 2007 while Miracle Hospital has a start date of July 2007. So on both accounts we have some serious job gaps!

The loan officer requested clarification from Joe and Susan and they explained… “Yes, we did have a few months in between those jobs. During that time Joe worked through a staffing company until a solid job came and Susan worked at a Nurses on Call company until the Hospital came through.”

When asked why they did not explain this up front, they simply did not think it mattered because they considered the jobs “part time”, held them for just a short time between their “main jobs” and neither of these “part time” jobs were anything they would include on their resume.

At this point, everything with exception of the job times was cleared and ready to go. Since lenders want to ensure that a borrower is still on the job when they close a loan, this is usually one of the last items verified. Needless to say, the brakes got put on the mortgage loan.

With further information and documentation, all employment was finally verified and Joe and Susan closed on their Charlotte home. However, they closed 5 days later than expected and those 5 days were the most frustrating days for everyone involved.

When you are applying for a mortgage loan in Charlotte (or anywhere for that matter), it is important that you disclose all jobs you have had that cover the past 24 months. Even if it is a job that does not seem to fit your resume, give the information to your loan officer. Be prepared to have dates of employment and a reasonable explanation for any job gaps.

Getting the most accurate information up front will make the entire process go much smoother and make your closing happen faster. Leaving out “unimportant” details can actually delay (or in some cases prevent) closings.

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Going Beyond the Approval Limits

One of the goals of getting pre-approved for a mortgage loan is to help determine how much home you can qualify to buy. In the best situation your lender will go beyond a pre-approval and seek to provide you with an automated approval.

An automated approval uses the major underwriting systems in the mortgage industry to determine a yes or no for a mortgage application. If the system says yes, it will list the requirements needed to get the loan closed. This is great because the job of an underwriter is to simply check off the boxes. The yes or no has already been done. Now its a matter of making sure the lender is getting the required documentation in order to fulfill the approval.

If the automated system says no, then a mortgage application would need to be submitted for a “manual decision.” With a Manual Underwiting decision, the underwriter has to make the yes or no decision. And since the automated system said no, the manual underwriter will be more on guard. After all, there was a reason the loan was declined… so what is being submitted to prove that the automated system is wrong? Well, that is the job of your lender.

With all this being said, a common question is “can we get more?” In other words, a potential buyer is approved using the automated system up to a certain dollar amount, but wants to know if they can exceed that number when looking for a home. Maybe the approval limit is lower than they hoped. Or maybe there are a couple homes that are just a bit above the approval. Either way, the question is can they go bigger?

If your pre-approval is from the Carolina Mortgage Connection, and it was based on an automated approval, the answer is…. maybe, but proceed with caution! If I could not get an automated approval for the dollar amount you need, we can certainly seek a manual approval. but be aware that this can take a bit longer, there is a greater chance of being declined (and getting frustrated) and in some cases (such as FHA) you could be disqualified to apply again for up to 6 months. Personally, I advise against going for a manual approval when you have an automated one. Why make things more difficult? But if you just can’t find a suitable home within the approval limits and have truly exhausted all options, a manual submission may just work.

Mortgage Qualification Tool for Home Buyers

So you are considering buying a home, but don’t want to be pressured by some salesperson. That’s fine. The Carolina Mortgage Connection has put together the Easy Qualifier program, designed to allow you to pre-qualify yourself!

Just enter some basic information and you can get an idea of how much of a mortgage you may qualify for. Once completed you can upgrade to a pre-approval, or simply go on about your business. Best of all, there is no cost and no pressure.

If you have questions about the mortgage process, you can always call us at 877-411-9327.  We look forward to helping you achieve your dreams.

Wow. You are almost there! You have been pre-approved for a mortgage and located just the right house. Your offer to purchase was accepted after some further negotiations over the house’s price.

You submitted your offer to purchase to your mortgage lender and all the income documents he requested. The home inspection went well and the home appraisal came in over what you offered!

The lender has submitted your loan to underwriting and you are simply waiting for final approval so you can close on your home… your dream is almost real!

Only a few more things to do before closing… Read the rest of this entry »