How numbers in the mortgage process may change

When you apply for a home the lender analyzes your credit score, your income credit score, and assets in determining your eligibility to buy a home. If anything changes in the process, numbers can as a result…

Numbers can change in the process in any number of the following ways-

  • insurance on your home is actually more than what you are estimating or that the houses in a special flood area These are all things that can change the numbers and change your original expectation of the original payment and cash to close.
  • income changed and now is less resulting in more cash down
  • credit changed and now your rate and terms change

Here is an example- as a result of getting updated information in the process such as new flood insurance for example that now raises your debt-to-income ratio which means now you need to pay off a credit card you weren’t anticipating.

This is a prime example of how one thing concretes a domino effect thereby changing other numbers in the process. This is no fault of yours or the lenders and goes in accordance with buying real estate, sometimes things happen.
Maybe as a result of these things, the closing got delayed which means you’re now rolling into another month which accounts for another 30 days of prepaid interest increasing your cash to close.
That can happen- another thing that occurs is maybe your income changes and you’re not working quite as much and the lender gets an updated verification of employment which changes your income which changes your debt ratio again, changing numbers in the process.

The bottom line is in a real estate transaction sometimes numbers can change and it’s the communication by which those numbers are communicated that makes all the difference between having an understanding with pragmatic solutions versus having a stressful process if a lender is not on top of their game in conveying to you solutions when circumstances beyond everyone’s control changes the math.

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