Less Than Perfect for a Mortgage

by Kristina on May 26, 2010 · 2 comments

green monopoly house

Waiting for a decision on your mortgage application is like waiting for blood test results or waiting for your tax return. You secretly hope for one answer but you are also prepared for the worst. If your mortgage application result comes back negative, then don’t worry…you have other options.

As a financial planner my primary area of focus is on investments and retirement planning but I serve my clients from A to Z. Unfortunately, this includes processing mortgages and applications for other credit products.  I say unfortunately because I hate calling clients and telling them that they are not able to buy their dream home, or provide a shelter for their families. That phone call is really a last result for me. Before I make that call I exhaust all other options available to my clients. Then, I can call them and say “Congratulations, your mortgage has been approved…these are the conditions.”

When you are providing information to your personal banker for your mortgage application please, do not lie to us…we will find out. Give us your real income and the real balances on your credit cards and other debts.  We will uncover the truth anyways when we request your credit bureau history, and verify your employment information.  It is easier for us to work with your maybe “less than perfect” situation than it is to justify your little un-truths.

As your personal banker, we can always try other options for your application such as increasing the life of the mortgage which is also known as the amortization. The longer the amortization, the lower the payments, and therefore the easier it is to factor those lower payments into your total debt ratio.

It is better to have low income on a mortgage application than it is to have bad credit. Keep your payments up to date on all credit products.  Before applying for a mortgage it is also a good idea to order your own personal credit report.  This will give you a clear picture of your present financial situation; so there will be no surprises when you apply for your mortgage.

If your income is too low to support your mortgage payments along with other applicable debts there are more options available. You can apply for a lower mortgage limit, you can add more to your down payment, you can close off your other debts, or you can request a co signer. However, if you have a poor credit history then there is really not much your personal banker can do to help you.  If you can’t make payments to your $5,000 credit card, the bank can’t justify approving you for a $225,000 mortgage.

Banks offer mortgage calculators online to assist you when shopping for a mortgage. You can calculate how much you can afford and the amounts of your mortgage payments all before you even book an appointment with your personal banker.

(Photo by woodleywonderworks)

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{ 2 comments… read them below or add one }

1 James May 26, 2010 at 12:33 pm

Who wrote this posting? It comes across like big brother…”please don’t lie to us…we will find out”! I feel like the author is making threats. Of course consumers shouldn’t lie, but I find this posting threatening and therefore unpleasant to read.

2 Migdalia May 26, 2010 at 2:14 pm

Hi Kristina!

I like everything you write, I find your articles really interesting and practical.

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