After you apply for a mortgage, the process of getting the
loan funded can be upset by ignorance. For example, many
people don't realize that they are still responsible for
mortgage loan payments even though an ex-spouse got to keep
the house. Unless a previous mortgage loan is refinanced or
paid off, the payment can count against the debt ratio. The
same goes for other co-signed loans.
Another common mistake is applying for a new credit
card, or financing the purchase of things during the
mortgage loan process, like buying a car, or new furniture.
Changes like these can drop credit scores, and increase debt ratios,
which can cause a higher rate or worse.
Changing jobs can be a good thing, but usually not in the
middle of processing a mortgage loan, especially if the change
is to commission based pay, a different line of work, or self
employment. Lenders want to see a stable source of income
showing a history of at least 2 years of earnings.
Borrowers who plan to refinance their current mortgage, or
take cash to pay off other debts, sometimes assume that they
don't need to make any more payments on those loans. If the
payments go past 30 days late, especially the current
mortgage, there may not be a new loan.
Sometimes liabilities that were not listed on the
mortgage loan application appear later in the title report,
which may include: tax liens from unpaid taxes, mechanics
liens from unpaid contractors, a judgment from a lawsuit, and
even a second mortgage that did not appear on the credit
report.
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