So you’re pre-approved, found the perfect home, and applied for a loan… what now? While you may be excited about the opportunity to decorate your new place, before you make any large purchases, move your money around, or make any major financial choices, consult your lender. They will be able to tell you how your financial decisions may impact your home loan.
Below is a list of things you should not do after applying for a mortgage.
1. Don’t deposit cash into your bank accounts before speaking to your lender.
Lenders need to source your money, and cash is not easily traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.
2. Don’t make any large purchases like a new car or furniture for your new home.
New debt comes with new monthly obligations. New obligations create new qualifications. People with new debt have higher debt-to-income ratios. Higher ratios make riskier loans, and then sometimes qualified borrowers no longer qualify.
3. Don’t co-sign other loans for anyone.
When you co-sign, you’re obligated. With that obligation comes higher ratios as well. Even if you promise you won’t be the one making the payments, it will count against you.
4. Don’t change bank accounts.
Remember, lenders need to source and track your assets. That task is significantly easier when there’s consistency among your accounts. Talk to your lender 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 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 maybe even your eligibility for approval.
6. Don’t close any credit accounts.
Many people applying for a loan believes that having less available credit makes them less of a risk and more likely to be approved. This is wrong! A major component of your score is your length and depth of credit 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.
7. Don’t change jobs.
Don’t change jobs without letting your loan officer know, even if your income will increase. A new job or change in career is a great thing, but additional information and documentation may be required, and eligibility could be affected.
Consult your lender before making any financial decisions after you’ve applied for a loan. 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 has changed recently, share that with your lender too. If you are thinking about applying for a loan, Click the link below to connect with a member of our team!
Topics: homebuying tips