How to make your financial profile less intricate for a mortgage application

It’s no secret these days mortgage companies want you to jump through hoops and provide what might seem like endless amounts of paperwork in order to grant you credit. Here are some things to consider when applying for a mortgage so you can better position yourself for a successful outcome…

Mortgage companies are in the business of making loans. They are not in the business of denying loans. That said every mortgage originated in America today must be compliant to make sure that that loan is deliverable the Fannie Mae and Freddie Mac. If that loan is off by the tiniest of hairs in any way that mortgage company has what’s called a buyback where the end investor forces the mortgage company to buy back the mortgage, resulting in a  loss for the company that created and sold off the mortgage. The horror stories about people having to provide additional documentation, 11-hour changes, all those things are a byproduct of the federal government specifically dictating how mortgage companies can originate loans. The federal government created a rule from the Dodd-Frank Act called ATR (ability-to-repay) which specifically requires each mortgage company to fully document every single ability for that borrower to repay the loan. That means if a bank statement is missing, if a cash deposit is not explained, if there is undisclosed debt, for example, ability-to-repay has not been met and your loan file will not move until you button up your finances.

The underwriter at the mortgage company is the one that makes the decision there the Golden Goose the Unicorn if you will. They’re the ones that hold all the cards and will determine if you’re going to get the keys to that house. The next person that you want in your corner is the loan officer who thinks like the underwriter and identifies the problems on your file before they arise. If the loan officer that you’re speaking with communicates to you like this that they’re trying to identify problems before they arise that’s a sure sign that you have a person of exceptional quality working in your favor which is exactly what you want. You don’t want an order taker at an online lender. You might as well be throwing a bunch of you know what against the wall and hoping that it sticks. Here are some common scenarios that come up on mortgage applications and how to fix them.

You’re self-employed and your business pays expenses. This subsequently would make your debt to income ratio go down right? Well here’s what you need to know

The expenses that your business pays has to be documented on a business bank account and has to be specifically identified on the tax return in order for the lender to not count these expenses in your debt to income ratio. Can’t provide this documentation? That’s going to increase your debt-to-income ratio. Forcing you to either borrow less, change loan programs, purchase a less expensive house, or come up with additional cash to pay off debt.

You don’t have a two-year work history. Let’s just say for example that you just came to the United States a year ago, you were working overseas and you’ve only been filing us tax returns for 1 year and you don’t have a 2-year work history of working the United States.

In this situation, you’re not going to get a mortgage for at least a year. It doesn’t matter the down payment or the cosigner or how much money you make or how much money you have in the bank, you must have a two-year work history for every residential mortgage loan program in America that is in alignment with Dodd-Frank.

Note: a full-time student with documented transcripts showing full-time enrollment status can offset the two-year work history requirement.

You have very little down payment and bad credit. It is going to be dependant on what your income is, if your down payment is super low and your credit is for example sub 620 you must have sufficient income to offset those two dings. A down payment can also come in the form of a gift from your employer or any family member that’s a blood relative.

If your situation is such that you have multiple layers of challenges and problems, you need to have realistic expectations about your goals. You must be able to document everything and then explain the details associated with the documentation. For example, a scenario such as a 660 credit score 10% down on a conventional loan, with a co-signed obligation for someone else that’s less than 12 months old, and hourly wage income with gyrating hours, with two or three accounts in dispute, looking for a conventional loan on a high balance mortgage is one such example. This is not impossible, but it would be classified as a challenging loan. This is the kind of thing that you need to give your loan officer time to help you work through. This way you can get your loan done with ease versus anxiety that can otherwise come working with a loan officer who doesn’t really have a grasp on your financial situation.

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When buying a home, it’s natural to want the lowest mortgage rate possible. But sometimes, chasing a slightly better rate from another lender—especially after your offer has already been accepted—can backfire in a big way. Let’s walk through a real-world scenario. You’ve got an offer accepted on a house. You’re working with a lender who has you approved, documents in underwriting, and a 21-day close of escrow in place. Everything is moving forward. Then you hear from another lender offering a rate that’s 0.25% lower, with slightly better closing costs. It’s tempting. But before you make a jump, here’s what you need to consider. Switching Lenders Comes with Time Costs When you pivot to a new lender mid-contract, they’ll need to: Re-underwrite your entire loan, Order a new appraisal, Disclose and sign new loan documents, Submit the file for final loan approval, Schedule and fund closing—all over again. This doesn’t happen overnight. Even in ideal circumstances, the new lender is likely going to need at least 25–30 days to close. If you’re in a fast-moving or competitive market, this is a real problem. Most sellers won’t grant a contract extension just because you’re switching lenders. So, what happens next? A Contract Extension Can Jeopardize Your Deal Asking for a contract extension means the seller must agree to delay closing. But that delay introduces risk—especially if the seller has backup offers or simply wants certainty. They may not grant the extension. Or worse, they could cancel the deal outright and take another buyer’s offer. Even if the seller agrees to extend, your earnest money and negotiation power could take a hit. And for what? A slightly lower rate that might save you $50 to $75 a month? Mortgage Rates Aren’t as Far Apart as You Think Here’s the truth: all mortgage lenders get their money from the same place—the bond market. The pricing differences between lenders usually range from 0.125% to 0.25% in rate on any given day. If one lender seems to be offering dramatically better pricing, the first thing you should ask is: How? Head over to FreddieMac.com and check the average 30-year fixed rate posted weekly. This is one of the most reliable benchmarks for where rates truly stand in the market. If a lender is quoting you a rate that’s well below that average, ask for the details: Are they charging extra points? Is this a teaser rate with a prepayment penalty? Is it based on a different loan product or risky structure? Often, what sounds “too good to be true”… is. Consider the Bigger Picture Think long-term. If you’re financing $600,000, a 0.25% lower rate may reduce your payment by roughly $75/month. But what if you lose the house and have to start over? That monthly savings doesn’t mean much if you’re outbid on your dream home or lose your deposit. Also, remember: you’re not going to keep this rate forever. Today’s homebuyers typically refinance when rates drop by about 0.75% or more. So if rates fall within the next year or two, you’ll likely be refinancing anyway. Instead of paying extra points now or risking the entire deal for a minor monthly savings, it may be better to accept a slightly higher rate—knowing you’ll refinance when the time is right. The Real Risk Isn’t the Rate—It’s the Delay When shopping for a home loan, don’t just ask, “What’s your rate?” Ask: Can you close on time? Is this rate sustainable or based on hidden costs? Will switching lenders delay or jeopardize my contract? A home purchase contract is a binding agreement between you and the seller to perform within a set timeframe. If you can’t meet those dates because you're chasing a slightly better rate elsewhere, you may want to reconsider if now is the right time to buy. Final Thoughts Yes, interest rates matter. But execution matters more. Before making a switch mid-transaction, talk to your lender. Have an honest conversation about pricing, timelines, and strategy. You might find that staying the course, securing the house, and planning to refinance later offers a better path to financial security. Want to Know Your Options? Let’s compare rates and strategies the smart way—without risking your dream home. 👉 Click here to get a custom rate quote today.

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