Key Things To Avoid After Applying for a Mortgage
Financial Awareness After Applying For A Mortgage Loan
You’ve found the perfect home, and now you want to buy it! Congratulations on your upcoming move-in day. However before making any large purchases or changes in life that might affect how much money is available for mortgage payments – consult with lender about what these financial decisions may mean regarding financing options as well as consequences if something goes wrong during this time period. Here are eight things not do after applying -
1. Don’t Deposit Cash into Your Bank Accounts Before Speaking with Your Bank or Lender.
In order to avoid any problems with your lender, you need discuss what kind of documentation they should expect when cash is deposited. Before depositing even one dollar in an account make sure that it’s documented properly!
2. Don’t Make Any Large Purchases Like a New Car or Furniture for Your Home.
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.
3. 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.
4. Don’t Change Bank Accounts.
Lenders need to be able to keep track with bank statements and if you change banks it cause confusion.
5. Don’t Apply for New Credit or Close Any Credit Cards.
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.
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.