Mortgage rates are at historic lows and there is no better time to buy a home. Do you qualify for those low advertised rates? Will you be able to secure a mortgage? Studies show that 6 in 10 people do qualify for mortgage loans. For those that can’t qualify here are ten reasons why a would-be borrower might face rejection:
1. A low credit score will keep you from getting a mortgage. Typically, a score less than 620 is unacceptable by most lender standards.
2. A maxed out credit card threshold will stop a mortgage in its tracks. If your balance more than 30 percent of the allowable credit lenders will take pause.
3. Multiple credit inquiries may drop your credit score. Limit your credit inquiries to mortgage-only credit pulls within a 30-day period.
4. Did you Co-sign a loan with someone? If so, plan to provide 12 months of canceled checks showing they make the payments to the creditor.
5. Other housing liability payments or a consumer loan for a vehicle may prevent your loan approval. Lenders are looking for you to have double the income to offset each dollar of debt you carry.
6. If you are self-employed you may not be showing income under a Schedule C. This reduces your borrowing power.
7. Claiming many unreimbursed business expenses and losses on your taxes may help you pay less taxes but it also can reduce your borrowing power.
8. If you change jobs often this could also hurt your chances at a mortgage. If you occupational status has changed in the past two years it can hurt you.
9. If you are planning on using cash for your purchase think again. All monies must come from some kind of a bank account.
10. Don’t plan on transferring money from different accounts during the loan process. Be prepared to show full bank statements and a chain of deposits etc.
Your mortgage professional should be able to look at your credit, debt, income and assets and make a determination of whether you qualify for a mortgage.
Having a baby can be a very expensive venture. A 2012 report from the U.S. Department of Agriculture says raising a child from birth through age 17 will cost a typical middle-income family a whopping $235,000. That is a lot of money so it is important to plan for your financial future, prepare for your new baby and protect your growing family. Here are some tips to get you and your family on the right track:
1. Purchase life insurance. You will need life insurance to protect your family. It is not as expensive as you think and you will get better rates when you’re young. Talk to your life insurance company about what amount of insurance you will need to protect your family.
2. Start planning for college. It may seems years away but you need to start college planning right away. According to the College Board, the average cost of tuition and fees for the 2011-12 school year was $8,244 for a public college and $28,500 for a private one,
3. Update your will. If you have a will you will need to update it and appoint a guardian for your child. If you do not gave a will now is the time to get one.
4. Prepare your baby budget. Babies are expensive, from diapers to child care you will need to look at how your baby will affect everyday expenses. Go to the store and price out diapers and other baby items, consider if you will be living on one income or paying for child care, this will help you figure out if you need to cut spending to afford your new baby.
5. Use a flexible spending account. If your employer offers a flexible spending account, you may be able to use it to pay up to $5,000 in child-care expenses a year. You can also use flexible spending account for health care costs. Money in a flexible spending account is exempt from income taxes.
While having a baby is expensive it is also exciting. It may also be a time when you are considering a housing change.
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Len Lochrie
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