Once you’ve found the right home and applied for a mortgage, there are some key things to keep in mind before you close. I know how exciting it is to think about how you’re going to decorate your new home, but before you make any large purchases, move your money around, or make any major life changes, you need to consult your lender. They can tell you how your financial decisions may impact your loan. Today I’m talking to you about the do’s and don’ts after applying for a home mortgage.
Here is a list of things you should NOT do after applying for a mortgage:
1. Don’t make any cash deposits. Cash is not easily traceable. Your lender needs to know where these deposits come from. Before you deposit any amount of cash into your accounts, discuss the proper ways to document your transactions with your loan officer.
2. Don’t make any large purchases. These could be things like a new car or furniture for your new home. New debt comes with new monthly obligations, and new obligations create new qualifications. People with new debt have higher debt-to-income ratios, which make for riskier loans. Sometimes qualified buyers no longer qualify.
3. Don’t co-sign any other loans. When you co-sign a loan, you become obligated. With that obligation comes higher ratios even if you promise that you won’t be the one making the payments. Your lender will have to count the payments against you.
“Discuss the proper ways to document your transactions with your loan officer.”
4. Don’t change bank accounts. Lenders need to source and track your assets. That task is significantly easier when there’s consistency among your accounts before you transfer any money.
5. 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, your FICO score will be impacted. Lower credit scores can determine your interest rates and maybe even your eligibility for approval.
6. Don’t close any lines of credit. Many buyers believe having less available credit makes them less risky and more likely to be approved. This is wrong. A major component of your score is the length and depth of your credit history. Closing accounts has a negative impact on both. Any dip 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.
Once you have applied for a mortgage, you do not want to do anything to jeopardize the home loan and lose the house of your dreams. If you have any real estate questions, you can always reach me at 425-466-2595. I’m happy to answer them.
