Today’s Real Estate market is highly competitive and you should avoid things that can jeopardize your closing in any way possible. Once you’ve found your dream home and applied for a mortgage, you should keep some things in mind before you close. Many buyers start decorating their new place before they have even moved, but before you make any large purchases, move your money around, or make any major life changes, be sure to consult your lender who can explain how your financial decisions may impact your home loan.
Here’s a list of things you shouldn’t do after applying for a mortgage. They’re all important to know – or simply just good reminders – for the process
Speak with Your Lender Before Making Large Cash Deposits into Your Bank
Lenders need to source your money, and cash isn’t easily traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.
Don’t Change Jobs During The Loan Process
Your loan officer must track the amount as well as the source of your annual income. If possible, avoid becoming self-employed or changing from salary to commission during this time.
Don’t Make Any Large Purchases Like Furniture or a New Car.
New debt comes with new monthly obligations. New obligations create new qualifications. People with new debt have higher debt-to-income ratios. Since higher ratios make for riskier loans, qualified borrowers may end up no longer qualifying for their mortgage.
Don’t Miss Any Credit Card or Loan Payments
Payment history is one of the most important factors for your Credit Score. If you miss any payments your credit score can go down and you could be denied for your Home Loan.
Don’t Co-Sign Other Loans for Anyone.
When you co-sign, you’re obligated. With that obligation comes higher debt-to-income ratios as well. Even if you promise you won’t be the one making the payments, your lender will have to count the payments against you.
Don’t Change Bank Accounts.
Remember, lenders need to source and track your assets. That task is much easier when there’s consistency among your accounts. Before you transfer any money, speak with your loan officer.
Don’t Apply for New Credit.
It doesn’t matter whether it’s a new credit card or a new car. When 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 determine your interest rate and possibly even your eligibility for approval.
Don’t Close Any Credit Accounts.
Many buyers believe having less available credit makes them less risky and more likely to be approved. This isn’t true. 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 determinants of your score.
Any blip in income, assets, or credit should be reviewed and executed in a way that ensures your home loan can still be approved. If your job or employment status has changed recently, share that with your lender as well. The best plan is to fully disclose and discuss your intentions with your loan officer before you do anything financial in nature.