We had buyers get pre-approved a few months ago with very tight debt ratios. Mr. Buyer was paid on a salary, and Mrs. Buyer was paid “hourly”. Issue: Mrs. Buyer took two days off from work without pay (because she was paid hourly), and the reduction in income pushed her debt ratios too high to qualify for the price they desire.
Here is a list of some things buyers must not do after we pre-approve them:
1. Do NOT take on new debt. We have pre-approved borrowers run up credit cards or finance new cars time and again, greatly reducing their qualifying numbers.
2. Do NOT make deposits that cannot be explained. We frequently have Asian buyers who move large sums of money from Asia to the U.S., and the deposits cannot be explained or paper-trailed. This is a topic in itself, to be addressed later.
3. Do NOT take days off if paid “hourly”. A single day off work without pay can do far more harm than most borrowers realize.
4. Do NOT get a job in a “different field”. A job change in the same field is OK, as long as the compensation is the same or higher. Bonus pay can become an issue though – also to be discussed in later blogs.
5. Do NOT liquidate assets. This seems obvious, but we need those assets for approvals. So hold off on major repairs and purchases.
6. Do NOT miss payments on any debts reporting on a credit report. This is obvious.
7. Do NOT co-sign for someone else’s debts. Even if one is just a “co-signer”, the debt will still show up on a credit report. And borrowers are responsible for that debt and the payments (until we can show twelve canceled checks from the person making payments, usually).
Founder/Broker | JVM Lending
(925) 855-4491 | DRE# 01524255, NMLS# 335646