Once you’ve found your dream home and applied for a
mortgage, there are some key things to keep in mind before you close. It’s
exciting to start thinking about moving in and decorating your new place, but
before you make any large purchases, move your money around, or make any major
life changes, be sure to consult your lender – someone who’s qualified to
explain how your financial decisions may impact your home loan.
Here’s a list of things you shouldn’t do after applying for
a mortgage. They’re all important to know – or simply just good reminders – for
the process.
1. Don’t Deposit Cash into Your Bank Accounts Before
Speaking with Your Bank or Lender.
Lenders need to source your money, and cash isn’t 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 Home.
New debt comes with new monthly obligations. New obligations
create new qualifications. People with new debt have higher debt-to-income
ratios. Since higher ratios make for riskier loans, qualified borrowers may end
up no longer qualifying for their mortgage.
3. Don’t Co-Sign Other Loans for Anyone.
When you co-sign, you’re obligated. With that obligation
comes higher debt-to-income ratios as well. Even if you promise you won’t be
the one making the payments, your lender will have to count the payments
against you.
4. Don’t Change Bank Accounts.
Remember, lenders need to source and track your assets. That
task is much easier when there’s consistency among your accounts. Before you
transfer any money, speak with your loan officer.
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 possibly
even your eligibility for approval.
6. Don’t Close Any Credit Accounts.
Many buyers believe having less available credit makes them
less risky and more likely to be approved. This isn’t true. 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 of your score.
Bottom Line
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 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.
Source: Real Estate with Keeping Current Matters
