This May Go without Saying but it does Bear Repeating
It is imperative that when you are in the process of obtaining a mortgage loan that you do not incur new debt. It is even better if you don’t even have your credit pulled at all. See the image below? (Screen shot of note on the bottom of an actual pre-approval) That is at the bottom of every single conditional approval that we receive.
There is a very good reason for this. When we qualify you we calculate your debt to income ratio (DTI) and that has a lot to do with the risk associated with lending to you. Risk factors such as credit and DTI are calculated in when your loan is priced.
If you incur new debts that changes your DTI and with it the parameters of you mortgage. You may not qualify for the same interest rate pricing or fee structure anymore. This would mean that we may have to re-disclose which could cause delays and maybe even cause us to go over our contractual obligations.
Worse than that, depending on the amount of the new monthly debt, you may not even qualify for the loan anymore. We would hate to have to jack your rate or ultimately deny you for because of new debt that you may have incurred. So please do not take out any new loans, lines of credit, or anything else that may increase your DTI.
If you can help it don’t even have your credit pulled until after we close because if you do it will need to be explained. If you want to switch from one phone carrier to another please wait until after you have closed on your mortgage to avoid having to explain that inquiry away.
Thanks for reading and as always questions and comments are welcomed and appreciated!