Buying a home has never been more affordable! Home values are stable in many metro New York neighborhoods and interest rates are still at historically extreme low levels. This combination has resulted in people having dramatically more buying power than they’ve had in decades!
Yet buying a home in today’s market requires diligence and planning. Unfortunately, most people look at the mortgage as an afterthought; something to obtain only after they’ve found a new house. This misconception is the cause of most loan denials.
Planning ahead can help you avoid these Top Five Reasons people lose the home of their dreams:
- Your debt-To-Income Ratio is Too High: Many borrowers believe their income is sufficient to qualify for their dream home. Yet they neglect to consider their car payments, student loans, credit card debt, their alimony and child support payments, and their loans against their pensions and retirement plans. All of these will raise your Debt-To-Income Ratio and ANY of these can push you over the limits.
- You’re self-employed, your business reflects significant revenue, but you’ve expensed most of it, leaving very little taxable income: There are many benefits to being self-employed. But self-employed income presents a double-edged sword. While you have the ability to manipulate your taxable income, it is your taxable income (with some adjustments) that’s used to qualify for a mortgage. Lenders must average your most recent two years’ tax filings to calculate your qualifying income.
- Unreimbursed Employee Expenses: You’re a W2 employee and your accountant does a great job itemizing your job expenses in order to reduce your taxable income. This too is a double-edged sword. Underwriters will reduce your qualifying income by the amount of employee expenses you’ve claimed on form 2106.
- Your bank statements reflect deposits, yet you cannot document the source: Do you work off the books? Did you have a garage sale or sell your car? Maybe you deposited wedding gifts. Unless you can acceptably document where these deposits came from (i.e. – copies of the deposited checks), the lender won’t consider these funds available to use towards your home purchase.
- You’re competing against multiple offers from strong buyers, ALL who’ve been Pre-Approved: The listing agent and the seller are looking to secure the best offer they can. Keep in mind the best offer is NOT always the highest offer. Sellers want peace of mind knowing their sale will close on time and not blow up in the 11th Yet you’ve moseyed into the open house with nothing but your word, saying “I should have no problems qualifying.” Or almost as bad, you went to “Your Bank,” spoke to some salesperson, and they generated a form letter for you.
Realtors cringe every time they hear, “I should have no problems qualifying.” And experience has shown them many of the letters put out by the “Big Banks” aren’t worth the paper they’re printed on.
Recently, Mortgage Wealth Advisors took steps to eliminate the misconceptions prevalent in today’s housing market and help more homebuyers avoid these common pitfalls. In March 2015, Mortgage Wealth Advisors launched our Home Opportunity Initiative, a public service to get the word out to communities throughout New York about the amazing home affordability being experienced right now and to educate people on their options for homeownership.
Call Us Today and receive a No-Cost, No-Obligation Home Opportunity Review to discover your options and to experience how your mortgage can fuel faster financial growth.
Warren Goldberg is President of Mortgage Wealth Advisors, a Certified Mortgage Planning Specialist®, and a published author. His interviews include Blog-Talk Radio, Newsday, and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.