So, you’ve applied for a mortgage. Congratulations! This is an exciting time, and one of the first steps in the home buying process! While it may feel like you’re in the clear, there are some things you will want to avoid doing, even after you’ve applied for a mortgage.
Applying for New Credit
You want to avoid applying for any type of new credit, whether it’s a new car, credit card, or so on. This can affect your FICO score, thus affecting your eligibility for approval on a mortgage.
A change of employment and/or income can have a negative impact on your mortgage eligibility. Your loan officer needs to be able to track your source of income, as well as the amount you are making. This is to ensure that you’ll be able to make payments on your mortgage with no issues.
Making Large Purchases
While the idea of becoming a homeowner soon may be exciting, don’t let the excitement cause you to make large purchases such as furniture, or anything else you may want to buy for your future home. Any monthly payments that are added to your bills will increase your debt-to-income ratio.
Depositing Large Sums of Money
If you deposit a large sum of money into one of your bank accounts, this may come up as a red flag to your lender. Our advice is to speak with your lender on the best way to deposit this money, and what documentation may need to be submitted along with the proof of deposit.
Cosigning on Loans
You may want to help a loved one out by cosigning on a loan for them, but if you’ve applied for a mortgage, you’ll want to avoid this. Lenders will consider the monthly payments for the loan you cosigned on as part of your monthly debts. This will then increase your debt-to-income ratio.
Changing Bank Accounts
If you’re looking at switching banks, we suggest holding off until after the home buying process. When you initially applied for a mortgage, you had to submit many documents, including your bank statement. If you switch banks, you will have to submit your bank statement from the new bank, and this can slow down the loan approval process.
Closing Credit Accounts
You’ll want to steer clear of closing any of your credit accounts. While initially, it may sound like a good idea to close a credit account or two, you won’t want to do this. Your credit accounts contribute to your credit history, and showing that you’ve been making payments on time over a long period of time. Proving your ability to make monthly payments on time is attractive to your lender, and helps you get approved for a mortgage!
Ready to apply for a mortgage? Contact Team Crescenzo today!