Key Things To Avoid After Applying for a Mortgage

By
Real Estate Agent with HomeSmart 0561240

Once you've found your dream home and applied for a mortgage, there are some key things to keep in mind before you close. Its 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 wont 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 its 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.

 

 

Posted by

e signature for Shayne Stone

“YOUR Rock-Solid Choice Realtor for Making Home Sellers a Profit & Home Buyers Equity”

Facebook Icon Instagram Icon Twitter Icon Blog Icon
Home Search Icon Market Insight Icon Home Value Icon

 

 

Comments (4)

Bill Salvatore - East Valley
Arizona Elite Properties - Chandler, AZ
Realtor - 602-999-0952 / em: golfArizona@cox.net

Great tips for sure.   Hope you have a relaxing weekend.  Thanks again for the post.  Time to get out and shovel, oh wait I live in Phoenix, sunny and 70 degrees today. bill

Jan 08, 2022 05:51 AM
Thomas J. Nelson, REALTOR ® e-Pro CRS RCS-D Vets
Big Block Realty 858.232.8722 - La Jolla, CA
& Host of Postcards From Success Podcast

I give the exact same list of "Please Do Not Purchase or Change" to my buyers Shayne Stone - as taught to me by Jason E. Gordon many years ago -  this is a great list to share with your buyers.

Jan 08, 2022 06:05 AM
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

Our Team once had a qualified buyer buy a new Mercedes after he got into contract on a home purchase. The change in the buyer's credit score and debt-to-income ratio killed the loan for which he had been approved. It took some scrambling to close that purchase but we got it done.  Close call!

Jan 08, 2022 09:29 AM
Kristin Johnston - REALTOR®
RE/MAX Platinum - Waukesha, WI
Giving Back With Each Home Sold!

Great post!  Thanks for sharing and have a wonderful day!~

Jan 11, 2022 07:27 AM