The #1 Reason It Is Difficult to Find Your Dream HomeThe headlines in real estate today all revolve around one major point: there is a shortage of homes available for sale. Price appreciation
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Things to Avoid After Applying for a Mortgage
Congratulations! You’ve found a home to buy and have applied for a mortgage!You’re undoubtedly excited about the opportunity to decorate your new home,but before you make any large purchases, move your money around, or makeany big-time life changes, consult your loan officer – someone who will be ableto tell you how your decisions will impact your home loan.Below is a list of Things You Shouldn’t Do After Applying for aMortgage.Some may seem obvious, but some may not.
1. Don’t Change Jobs or the Way You Are Paid at Your Job. Your loanofficer must be able to track the source and amount of your annual income. Ifpossible, you’ll want to avoid changing from salary to commission or becomingself-employed during this time as well.
2. Don’t Deposit Cash into Your Bank Accounts. Lenders need to sourceyour money, and cash is not really traceable. Before you deposit any amount ofcash into your accounts, discuss the proper way to document your transactionsThings to Avoid After Applying for a Mortgagewith your loan officer.
3. Don’t Make Any Large Purchases Like a New Car or Furniture for YourNew Home. New debt comes with it, including new monthly obligations. Newobligations create new qualifications. People with new debt have higher debt toincome ratios…higher ratios make for riskier loans…and sometimes qualifiedborrowers no longer qualify.
4. Don’t Co-Sign Other Loans for Anyone. When you co-sign, you areobligated. As we mentioned, with that obligation comes higher ratios as well.Even if you swear you will not be the one making the payments, your lender willhave to count the payments against you.
5. Don’t Change Bank Accounts. Remember, lenders need to source andtrack assets. That task is significantly easier when there is consistency amongyour accounts. Before you even transfer any money, talk to your loan officer.
6. Don’t Apply for New Credit. It doesn’t matter whether it’s a new credit cardor a new car. When you have your credit report run by organizations in multiplefinancial channels (mortgage, credit card, auto, etc.), your FICO® score will beaffected. Lower credit scores can determine your interest rate and maybe evenyour eligibility for approval.
7. Don’t Close Any Credit Accounts. Many clients erroneously believe thathaving less available credit makes them less risky and more likely to beapproved. Wrong. A major component of your score is your length and depth ofcredit history (as opposed to just your payment history) and your total usage ofcredit as a percentage of available credit. Closing accounts has a negativeimpact on both of those determinants in your score.
Bottom LineAny blip in income, assets, or credit should be reviewed and executed in a waythat ensures your home loan can still be approved. The best advice is to fullydisclose and discuss your plans with your loan officer before you do anythingfinancial in nature. They are there to guide you through the process.ings to Avoid After Applying for a Mortgage
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