Did you just submit your mortgage application? Don’t Make These Mistakes!
Like many people do in the new year, you might be getting ready to buy your next home! The first thing you’ll need to do is meet with a mortgage rep in order to understand what sort of loan is best for you.
Once you apply for that loan, remember to NOT do any of the following:
Don’t Deposit Large Sums of Cash
The bank will be going over your assets with a fine tooth comb – they’ll be asking you to tell them where your cash on hand came from. To avoid making the sourcing of funds more complicated, don’t deposit any large sums of money – you want to make sure they don’t think you shook down Aunt Ida for extra cash.
Don’t Make Any Large Purchases
Large purchases at this time will change your debt-to-income ratio. Don’t take out a new car loan or purchase furniture on a payment plan. New debt makes for riskier loans – and you might change your qualifications. Hold off on these purchases until AFTER closing!
Don’t Cosign Loans for Anyone
It’s not the time to be the perfect big sister or brother or parent – cosigning on someone else’s loan changes your credit risk. It doesn’t even matter that it won’t be you making the payments. Just don’t do it – in fact, this is probably good advice whether you are applying for mortgage or not!
Don’t Switch Bank Accounts
Changing banks makes it harder to track and source your assets. Wait until after closing to move your money to the bank in your new neighborhood.
Don’t Apply for New Credit
When you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), it will have an impact on your FICO® score. Lower credit scores can determine your interest rate and possibly even your eligibility for approval. An important note: It’s okay to shop around for the best mortgage rate, it’s okay for multiple mortgage companies to run your credit – it only impacts your score when there are multiple credit reports run for different purchases.
Don’t Close Any Accounts
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 aspects of your score.
Do Discuss Changes with Your Lender
Be upfront about any changes that occur or you’re expecting to occur when talking with your lender. Blips 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. Ultimately, it’s best to fully disclose and discuss your intentions with your loan officer before you do anything financial in nature.
Did you learn what Mortgage Application mistakes not to make? Are you ready to be introduced to our favorite lenders? Reach out so we can make it happen for you.
Jennifer Blanchard Team
Berkshire Hathaway HomeServices NJ Properties