As we are in the post housing-market-crash era, banks have taken a greater interest in reviewing mortgage applications. Motivated in part to ferret out fraud, banks are looking closer at applications to avoid lending to unqualified buyers.
According to the New York Times
, banks' new efforts have lead to a 40% reduction in fraudulent mortgage applications as compared to 2010. Bankers look to specific triggers to determine whether the application contains fraud.
The New York Times has highlighted four known triggers. Below each trigger, I've provide a solution to avoid or minimize these triggers that may unnecessarily delay your valid application.
"A LARGE BANK DEPOSIT Lenders are required by federal regulators to confirm that funds in an account come from bona fide sources, like a gift from your grandmother for the down payment."
Solution: Disclose any gifts on your initial application.
"YOUR ADDRESS If you are buying a primary home three hours from Manhattan yet list your employment with a Midtown company, your case may draw scrutiny, said Jason Auerbach, the divisional manager for the Manhattan office of First Choice Loan Services."
Solution: Get a letter from your employer verifying your employment history.
"NEW OR UNDISCLOSED DEBTS When you’re in the process of buying a home, avoid taking on other debt. Buying a sofa or a furnace on credit could also slow or even scuttle your mortgage closing, depending on your situation, if it pushed your total debt levels beyond acceptable limits."
Solution: Do not take on any new debt obligations or open new credit cards during the process.
"INCOME ISSUES If you disclose that you earn twice what the average person in your occupation earns, you may need to document that discrepancy."
Solution: Provide copies of your tax returns or authorize the release of your returns.