With every pre-approval letter, we also include what we call our “Don’t List.” These are suggested actions to avoid to ensure borrowers remain qualified. These actions do not always kill deals, but they definitely have the potential.
1. Do NOT make large deposits that cannot be explained. All “large deposits” must be explained and/or “paper-trailed.” Deposits as small as $500 that are from mattress money, untraceable foreign bank accounts, or cash payments of any kind can render an entire bank account invalid and unusable for qualifying. If you need to make large deposits that are difficult to “paper-trail”, contact us for “coaching” or advice. Keep a paper-trail for every large deposit you make.
2. Do NOT take on new debt. If you increase credit card balances or finance a vehicle, your debt ratios will be adversely impacted, reducing your maximum purchase price.
3. Do NOT take days off if paid “hourly.” If your debt ratios are high or near the limit, even a single day off work can push you out of your qualifying range.
4. Do NOT spend liquid assets. Pre-approval software relies on specific liquid asset levels; pre-approval amounts can change if liquid assets are significantly reduced.
5. Do NOT miss payments on any debts reporting on a credit report. Even though this is relatively obvious we like to remind buyers that missing any monthly payments can sharply reduce their credit score, and their qualification amount.
6. Do NOT co-sign for someone else’s debts. Even if you are just a “co-signer”, the debt will still show up on your credit report. You will be responsible for that debt and the payments (unless we can show twelve canceled checks from the person making payments, in most cases).
7. Do NOT file taxes with a tax liability owing, or with less income than in previous years. This applies to self-employed borrowers primarily, particularly during tax season. We always base our qualifying income on the most recent filed tax returns, and we must prove that all tax liabilities are paid. We recommend that borrowers file an extension when possible if they are making offers during tax season. Please consult with us for additional explanation.
Jay Voorhees
Founder/Broker | JVM Lending
(855) 855-4491 | DRE# 01524255, NMLS# 335646
