Okay, maybe that sounds a little harsh to some. But that's the way it is...no flies on us!
It seems now, more than ever, I hear people bitch and moan about how hard up they are and how unfair the world is...it bothers me to know these people reproduce. They are everywhere!!
You know who I'm talking about...those people who think the world revolves around them. The guy who gets caught in traffic and asks, "Why is this happening to me?".
Sadly, these people are in abundance...and you can't outrun them.
We've posted a lot of blogs and Facebook posts and Tweets over the past few years...things that people can use as solid information when getting ready to obtain a mortgage. Today we are going to venture off in a new direction...at least for this post. Today, we focus on the DUMB THINGS PEOPLE DO TO SABOTAGE THEIR CHANCE AT GETTING A MORTGAGE!!
1. Missed Payments: At any time you miss a payment on a Loan, a Credit Card, a Vehicle Loan, a Line of Credit, a Mortgage...and even a CELL PHONE BILL can have a serious impact on your ability to obtain a New Mortgage. Really?? Cell Phone Bill's Too? YES, even missing a payment on your cell phone can be detrimental. In Canada, most cell phone providers are now reporting your monthly bill payment history.
"How Can I Avoid This?" Simple...PAY YOUR BILLS ON TIME EVERY TIME ALL THE TIME!
2. Car Shopping BEFORE Mortgage Shopping: O-M-G!! It's absolutely mind boggling how many credit reports Dealerships pull when a person applies for financing. What's disgusting is that most people will continue to destroy their credit unknowingly right up until the time they finally find a car they can obtain financing on. Here's how it goes.
You find a car you want. You think you can afford the payments...after all, your new buddy the Car Salesman has convinced you they can get anyone approved to buy a car. So, you sit down in the finance office, you sign a waiver/agreement permitting the use of your personal information and to obtain a credit report to secure your financing. They pull your credit bureau for Finance Company "A". Then again for Finance Company "B"...and they continue to do this until one of them finally says yes...usually at a ridiculous High Interest Rate and High Payments!
It doesn't end there...a lot of people will just keep shopping from dealer to dealer and do this same process 3 or 4 times over and over again. Every time you have someone pull your credit report...YOUR SCORE GOES DOWN!!
"How Can I Avoid This?" Simple...If you need a car loan, check with your bank first. They will pull 1 report. If they say "Yes", then you pretty much qualify for everything else out there and you should easily qualify for the Dealerships Special Financing offers. IF however your bank says "NO", ask them why and heed their advice.
3. Change Jobs: This one sounds like a no-brainer...but it happens. If you decide to change jobs and move in to a whole new industry shortly before you decide to get a mortgage...you are just creating havoc for yourself. Mortgage's are based on RISK...and if you aren't secure in your job and/or industry, it's pretty difficult for a lender to overlook.
"How Can I Avoid This?" Simple...talk to a Mortgage Professional and TELL THEM the whole story. Believe it or not, but we are pretty good at this sort of thing and we will be able to give you good advice on how to proceed. Oh...and dear god, DON'T Confuse a MORTGAGE PROFESSIONAL for anyone who works at a BANK!!
Bank employees are not Professionals...sure, they dress well and may even look the part, but their education has not prepared them for their job. They may know "a little about a lot of things"...but when you have to get "a lot about 1 thing"...it's best to go see a proper professional. Consider this, would you go see a Dentist for a Heart Surgery? Not likely...even though they are the "same" in some ways, after all they are both DOCTORS...their professions are world's apart. The same goes for the finance world.
In reality, Banks are simply the "7-11" of the Finance Industry...they are built and priced for convenience. Ever buy a loaf of bread at 7-11? Wasn't cheap was it?
4. LIE: Oh yeah...this may not be a good thing to do. We'll see right through it, and if we miss it, the lender or the insurer will see right though it. If you have been Bankrupt, or have experienced any insolvency in your life - it's best to tell us about it. We know it's a bit embarrassing to disclose, but we aren't going to judge you for it. We understand life happens...but trying to pull the wool over our eyes about it will only hurt you.
Don't lie about your job either. We will find out. If you are Self Employed - Don't lie to us about your income...WE WILL FIND OUT!!
"How Can I Avoid This?" Simple...DON'T LIE!
5. Taking on a Lot of Debt: I'm not gonna preach here. I understand people get car loans and student loans and maybe have a Credit Card or two...but there's a fine line between what's "reasonable" and what's "excessive." If you have a pile of debt...you are in "la-la land" if you think any Mortgage Lender wants to give you MORE money.
So what exactly is a "pile" of debt. Well let me simplify it, if you live off your credit cards and don't pay them off MONTHLY to a "Zero balance"...you probably have too much debt. If you just took out a new Car loan for $30,000.00 and your balance is $29,000.00 - guess what? Lenders are going to scrutinize the hell out of that to be sure you can handle it along with a New Mortgage. If your credit card balance is the same, or near the same, as the card "limit"...you have too much debt.
Sound discouraging? It's meant to.
But all is not lost. Exercise a little common sense and this stuff is pretty basic...like Peanut Butter and Jam Basic.
Don't forget, Common Sense is not a Super Power...you can use it!!
Got Questions? Want to chat? Give us a call! 306-205-1270 or 877-753-6287 (877-75-FOCUS).