• June 2019
  • A PUBLICATION OF THE SIOUX FALLS AREA CHAMBER OF COMMERCE

Avoiding Mortgage Mishaps

You learn a lot in 20 years. During my nearly two decades as a mortgage lender, I've helped many of my clients avoid common pitfalls during the mortgage process. Just because you are pre-qualified, doesn't mean you have the loan. Rates, terms, even your qualification can change during the time between application and closing. Here are few common mortgage mistakes that you can easily avoid.

1. Don't change jobs, become self-employed or quit your job. Steady employment and income are key factors to securing a mortgage loan. Most lenders want two years of steady employment at one job. Switching in the middle of the process may cause problems.

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...mortgage pitfalls can be avoided by using a little common sense

2. Be happy with your current car, truck or van – you don't want to live in it. Your debt-to-income (DTI) ratio is a major factor when considering your qualification level. If you add additional debt during the process, it could affect your terms and even sink the deal.

3. Don't fall behind on your credit card payments. Your payment history makes up more than one-third of your credit score. Just one late payment could drop your score and change your mortgage deal.

4. Never spend your closing or down-payment funds. Unless you are doing a First-Time Home Buyers loan, your down payment and closing costs won't be covered by your loan. Typically, they come from your personal account on closing day.

5. Don't omit debts or liabilities from your loan application. As a lender, we verify everything on your loan application. Omitting something, even by mistake, can cause delays and even keep you from qualifying for your loan.

6. Be happy with your current furniture. Just like buying a car, any major purchase during the mortgage process will trigger a red flag to your lender.

7. Don't conduct unnecessary credit checks. A credit check can negatively affect your credit score, especially if you have several of them during a short period of time. Your credit can be pulled anytime during the process and will be checked again close to your closing date. Any changes to your score may cause unnecessary delays or denials.

8. Check with your loan officer about gift funds. Be sure to let your lender know if you receive gift funds from family, inheritance or a trust. Major deposits are typically signs of newly borrowed money. Letting your lender know will help you avoid potential hassles.

9. Inform your lender if changing bank accounts. When you fill out your mortgage application, you're asked to submit bank statements to verify income, steady employment and assets. Switching banks could mean starting over and losing a chance at your dream home.

10. Just say "no" when asked to co-sign a loan – for anyone! Co-signing a loan means you're guaranteeing someone else's debt and that changes your debt-to-income ratio significantly.

Most of these common mortgage pitfalls can be avoided by using a little common sense and working with a qualified lender who has your best interests in mind. The top thing you can do is stay in close contact. If you have questions, don't be afraid to ask. We're here to help the process go smoothly for all parties involved. Our goal is to get you into your home as quickly and stress-free as possible.


Ryan Spellerberg is Vice President of Mortgage Banking at First PREMIER Bank. He understands buying a home is stressful and he guides his clients through the process, ensuring they feel both comfortable with their purchase and supported by their lender and realtor team. Whether it is a first home, second or seventh, Ryan's ability to keep closings on track, together with his sensible financial advice, is greatly appreciated by all his clients.

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