7 Things To Avoid After Applying for a Mortgage!
Congratulations! You’ve found a home to buy and haveapplied for a mortgage! You are undoubtedly excited about theopportunity to decorate your new home! But before you make any bigpurchases, move any money around, or make any big-time lifechanges, consult your loan officer. They will be able to tell youhow your decision will impact your home loan.
Below is a list of 7 Things You Shouldn’t DoAfter Applying for a Mortgage! Some may seem obvious,but some may not!
1. Don’t change jobs or the way you are paid atyour job!
Your loan officer must be able to track the source and amount ofyour annual income. If possible, you’ll want to avoidchanging from salary to commission or becoming self-employed duringthis time as well.
2. Don’t deposit cash into your bankaccounts
Lenders need to source your money and cash is not reallytraceable. Before you deposit any amount of cash into youraccounts, discuss the proper way to document your transactions withyour loan officer.
3. Don’t make any large purchases like a new caror new furniture for your new home
New debt comes with it, including new monthly obligations. Newobligations create new qualifications. People with new debt havehigher debt to income ratios… higher ratios make for riskierloans… and sometimes qualified borrowers no longerqualify.
4. Don’t co-sign other loans foranyone
When you co-sign, you are obligated. As we mentioned, with thatobligation comes higher ratios as well. Even if you swear you willnot be the one making the payments, your lender will have to countthe payment against you.
5. Don’t change bank accounts
Remember, lenders need to source and track assets. That task issignificantly easier when there is consistency among your accounts.Before you even transfer money between accounts, talk to your loanofficer.
6. Don’t apply for new credit
It doesn’t matter whether it’s a new credit card ora new car. When you have your credit report run by organizations inmultiple financial channels (mortgage, credit card, auto,etc.), your FICO score will be affected. Lower credit scorescan determine your interest rate and maybe even your eligibilityfor approval.
7. Don’t close any credit accounts
Many clients have erroneously believed that having lessavailable credit makes them less risky and more likely to beapproved. Wrong. A major component of your score is your length anddepth 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 those determinantsof your score.
Bottom Line
Any blip in income, assets, or credit should be reviewed andexecuted in a way that ensures your home loan can still beapproved. The best advice is to fully disclose and discuss yourplans with your loan officer before you do anything financial innature. They are there to guide you through the process.