The Do's and Don'ts after Applying for a Mortgage #4
Once you’ve found your dream home and applied for a mortgage, there are some key things to practice before closing day. Of course, you are excited about decorating ideas for your new place, but before you make any large purchases, move your money around, or make any major life changes, run them all past your realtor, or lender – someone who is qualified regarding how financial decisions will most likely impact your home loan.
Cited by Keeping Current Matters, below is a great list of DON'TS, after you apply for a mortgage. They’re all very important to know – or simply just good reminders – for the process.
1. Don’t Deposit Cash into Your Bank Accounts Before Speaking with Your Bank or Lender. Lenders need to source your money, and cash is not easily traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.
2. Don’t Make Any Large Purchases Like a New Car or Furniture for Your New Home. New debt, along side with new obligations create new qualifications. People with new debt have higher debt-to-income ratios. Higher ratios make for riskier loans, and then sometimes qualified borrowers no longer qualify.
3. Don’t Co-Sign Other Loans for Anyone. When you co-sign, you’re obligated. That brings higher ratios into play. Even if you promise you won’t be the one making the payments, your lender will be counting the payments against you.
4. Don’t Change Bank Accounts. Remember, lenders need to source and track your assets. That task is significantly easier when there’s consistency among your accounts. Before you transfer any money, speak with your loan officer.
5. Don’t Apply for New Credit. Anytime you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO® score will be impacted! Lower credit scores can easily be a determining factor in your interest rate and may ultimately effect your eligibility for the mortgage approval.
6. Don’t Close Any Credit Accounts. Many buyers believe having less available credit makes them less risky and more likely to be approved. Wrong. A major component of your score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both of those determining factors in regards to your score.
One More Very Important Thought
Any alterations in your income, assets, or credit should be reviewed and implemented in a way that secures your home loan approval. Do not change jobs, during this process... but if your job or employment status has changed recently, share that information right away with your lender. This process works best with full disclosure and discussions with your loan officer before you make those important financial decisions.
~Real Advantage Partners team