Things to Avoid After Applying for a Mortgage
Paul Tosello
Looking for a Residential Real Estate Expert? Meet Paul, a Realtor with 37 years of experience and a background in residential construction...
Looking for a Residential Real Estate Expert? Meet Paul, a Realtor with 37 years of experience and a background in residential construction...
Don't Change Jobs or the Way You are Paid
Your loan officer must be able to track the source and amount of your annual income. If possible, you’ll want to avoid changing from salary to commission or becoming self-employed during this time as well.
Don't Deposit Cash into your Bank Accounts
Lenders need to source your money, and cash is not really 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 Purchase a Car or Furniture
ew debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher debt to income ratios…higher ratios make for riskier loans…and sometimes qualified borrowers no longer qualify.
Don't Co-Sign Other Loans
When you co-sign, you are obligated. 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 will have to count the payments against you.
Don't Change Bank Accounts
Remember, lenders need to source and track assets. That task is significantly easier when there is consistency among your accounts. Before you even transfer any money, talk to 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 affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.
Don't Close Any Credit Accounts
Many clients erroneously believe that 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 determinants in your score.
Why These Are Important to Know
- Any blip in income, assets, or credit should be reviewed and executed in a way that ensures your home loan can still be approved.
- The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature.
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