Once you’ve found the right home and applied for a mortgage,
there are some key things to keep in mind before you close. You’re undoubtedly
excited about the opportunity to decorate your new place, but before you make
any large purchases, move your money around, or make any major life changes,
consult your lender – someone who is qualified to tell you how your financial
decisions may impact your home loan.
Below is 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 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 for 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, 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 significantly 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 maybe 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. 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 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