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Do's and Don'ts After Applying For a Mortgage

By
Mortgage and Lending with D A Griffin Financial.LLC NMLS 6380

 

Do's and Don'ts After Applying For A Mortgage

Navigating the Mortgage Maze: 10 Crucial Do's and Don'ts After Applying

Once you've submitted your mortgage application, it's crucial to tread carefully in the financial landscape to ensure a smooth approval process. Here are 10 things you should avoid after applying for a mortgage:

1. Steer Clear of Significant Purchases

Resist the temptation to make large purchases, whether it's a new car or extravagant furniture, in the period following your mortgage application. Lenders analyze your debt-to-income ratio, and substantial new debts can raise concerns about your financial stability.

2. Maintain Job Stability

Lenders appreciate stability, and changing jobs during the mortgage application process might send red flags. Try to stay in your current job until the mortgage is approved, as it reflects positively on your ability to repay the loan.

3. Resist Opening New Credit Lines

Opening new credit cards or taking on additional loans can adversely impact your credit score, which plays a pivotal role in the mortgage approval process. Lenders prefer borrowers with a stable credit history, so it's advisable to hold off on any new credit activities until after your mortgage is secured.

4. Timely Bill Payments Are Non-Negotiable

Maintaining a positive credit history is paramount. Ensure that all your bills are paid on time, as late payments can significantly impact your credit score. A good credit history is a key factor that lenders consider when evaluating your mortgage application.

5. Don't Close Existing Credit Accounts

While it may seem counterintuitive, closing existing credit accounts can actually harm your credit score. Lenders consider your credit utilization ratio, and closing accounts may reduce your overall credit limit, affecting this ratio. It's generally advisable to keep existing credit lines open and active.

6. Steer Clear of Co-Signing

Avoid co-signing for someone else's loan during the mortgage application process. Co-signing increases your financial liabilities, potentially impacting your debt-to-income ratio. Lenders want assurance that you can comfortably manage the mortgage payments without additional financial stress.

7. Windfalls Are for Later

Receiving unexpected money, such as a bonus or inheritance, is undoubtedly exciting. However, it's wise to resist the urge to splurge on major expenses until after your mortgage is approved. Using windfalls wisely demonstrates financial responsibility to lenders.

8. Document All Deposits

Lenders meticulously review your bank statements. Any large, undocumented deposits may raise suspicions. Ensure that all deposits are well-documented to provide clarity and transparency during the mortgage application process.

9. Keep Your Credit Profile Stable

Avoid making changes to your credit profile, such as consolidating debt or transferring balances, as these actions can affect your credit score. Stability in your financial behavior is key to presenting a favorable credit profile to lenders.

10. Communication is Key

Stay engaged with your mortgage lender. Promptly respond to any requests for additional documentation or information. Open communication fosters a positive relationship and ensures that the mortgage approval process proceeds smoothly.

The period following a mortgage application is a critical point that requires financial sense.

By adhering to these 10 do's and don'ts, you can navigate the mortgage maze with confidence, increasing the likelihood of a successful and timely approval. Remember, consulting with us, your mortgage advisor, for personalized guidance is always a smart move on your journey to homeownership.


* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.

Michael J. Perry
KW Elite - Lancaster, PA
Lancaster, PA Relo Specialist

Excellent blog post ! We cover this during our Buyer Consultation Sessions. However we do need to remind them !

Jan 26, 2024 10:40 AM
Dora Griffin

Thanks, Michael.  Happy you do this because most buyers don't know about these. 

Jan 26, 2024 10:51 AM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

Good information for buyers to recognize. I once had a buyer coming for a second showing on a home they wanted to buy, and was so proud to show me his new car. I asked him if it would sleep the family and when I explained his wife almost drop kicked him in the .....

Jan 26, 2024 12:13 PM
Dora Griffin

LOL  "don't buy a new car unless you plan on sleeping in it".   That's why we have to be sure buyers know most of the pitfalls. 

Jan 26, 2024 12:18 PM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Dora Griffin those are big no, no's, but unfortunately they happen way to often.

Jan 26, 2024 03:10 PM
Dora Griffin

Thanks, George.  I tell all my homebuyers bank statements are the hardest thing I do. Today most folks move money between accounts on a regular basis.   

Jan 29, 2024 07:39 AM
Charles Ross - eXp Realty LLC
eXp Realty LLC Salina Group - Salina, KS
Love To Help People

Dora Griffin, your article on mortgage application dos and don'ts is a must-read for anyone in the home-buying process. Your expert guidance helps buyers maintain a strong financial position, ensuring a smoother mortgage approval. Excellent work! #MortgageTips #SmartHomeBuying 🏠📊

Jan 26, 2024 03:41 PM
Dora Griffin

Thanks, Charles.  It is a pretty good list to at least alert homebuyers to ask questions.  Have a great Monday!

Jan 29, 2024 07:40 AM
Richard Weeks
Dallas, TX
REALTOR®, Broker
Great information, thanks for sharing.  I hope you have a great day.
Jan 27, 2024 04:08 AM
Dora Griffin

Thanks, Richard.  You as well.  I'm happy you liked it.

Jan 29, 2024 07:40 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello and great information to share with us here in the Rain.  Make it a great Saturday!

Jan 27, 2024 09:31 AM
Dora Griffin

Thanks, Will!  It was a nice rainy Saturday, pretty much like the last week of days!  I love rain, here, there, everywhere!  Have a great week!!

Jan 29, 2024 07:41 AM