4 Tips for Avoiding a Failed Home Loan

Home loans fall through for all kinds of reasons, especially when home buyers don’t realize how their spending and saving habits affect the loans they qualify for. Here are some tips to be aware of in the house hunting process that can help prevent failed loans.

1. Don’t make large purchases or acquire additional credit lines

If your clients buy new cars, furniture or home appliances, open new lines of credit or make any other large purchase, their debt-to-income ratios will change. Remind your clients about the importance of being economical, particularly through the house hunting and home loan process.

2. Don’t change jobs

A change in compensation or job industry may affect your clients’ ability to qualify. Soon before closing, it’s not uncommon for lenders to call a client’s place of employment to verify that he or she still works there and has the same job title that’s listed on their loan application.

3. Do keep a paper trail

Your clients should keep documentation of any large deposits into their bank accounts. It’s important for them to have copies of all paperwork necessary to prove a financial transaction, including all checks, deposit slips, loan paperwork, forms to liquidate assets, etc. If you have a client who can’t source a large cash deposit that is in his or her bank account, that money can’t be counted toward their loan eligibility.

4. Don’t co-sign

If your clients co-sign with anyone to obtain a line of credit or make a purchase, it will show up on your clients’ credit reports as an additional debt.