Congratulations, you have decided to become a home owner and have applied for a mortgage loan! Hopefully this is your first step in the home purchase process.
You are surely excited about making a move and searching HOUZZ, Pinterest, and other fun sites for new decorating ideas! But wait…….. before you move any money around, make any big purchases or any other large financial changes, consult your loan officer. Your trusted loan officer, and they should be trusted, will tell you if your decision will negatively impact your home loan.
Here are 7 Things to avoid after applying for a mortgage!
1. No jobs changes or the way you are paid! A mortgage lender/underwriter must be able to track the source and amount of your monthly income. If possible, avoid changing from salary to commission, changing employer, or becoming self-employed.
2. No large on consistent cash deposits into your bank accounts. Lenders need to know the source of your money and cash is difficult to trace. Before you deposit that cash stashed in your mattress or given to you by a beloved family member talk to your loan officer. They can discuss the proper way to document your transactions.
3. No large purchases. Often times new debt comes with large purchases like furniture or cars, including new monthly obligations. These new debts create new qualification requirements as your debt to income ratios have changed and higher ratios make for riskier loans… and sometimes previously qualified borrowers no longer qualify. Even if you pay cash for large purchases, consult your lender, as your cash reserve is also considered in loan qualification.
4. No co-signing other loans for anyone. Yep… when you co-sign, you are on thee hook for the loan and your credit is checked. As I mentioned, with debt comes higher ratios and it does not matter if you or someone else is making the monthly payment.
5. No bank account changes. Remember, lenders/underwriters need to source and track funds and assets. In order to do this with no confusion, keeping your current accounts in place and in use is best. Moving accounts to another bank or closing a checking account you have used for years can make the loan qualification process more difficult. Even before you transfer money between accounts, talk to your trusted loan officer.
6. No new credit. This includes credit cards, new car, department store card, student loan, or over draft protection credit on your checking account. When anyone runs your credit report, your FICO score will be affected. YES, even if they just run your credit and do not issue you any credit, in can change your score. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.
7. No closing current credit accounts. This one can be a bit confusing since at first thought having less available credit should make someone less risky and more likely to be approved. Wrong. A major aspect 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 the available credit to you. Closing accounts can have a negative impact on both those determinants of your score.
Once you have a pre approval or fully applied for a mortgage loan any change in income, assets, or credit could possibly effect your final interest rate and even your ability to qualify for a loan. My best advice is disclose and discuss any financial plans with your loan officer before you do anything. They are there to guide you.
Is it time for you to purchase a home in Northern VA? Give me a call and let me put 16 years experience with over 8,000 homes toured, 4,000 unique personalities negotiated with, and over 33,000 hours directly helping Northern VA Home Buyers and Sellers achieve their goal.
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Original article on the Call Joey Keeping Current Matters Blog.
I have been a REALTOR and broker since 2003, located in Vienna VA, where I also live. I’m a 3rd generation real estate professional, born and raised in Northern VA, so I know the market.
I make the home buying and home selling process easy and fun. With years of experience working with my clients and training other agents, I give my clients an edge in all real estate transactions. My listing clients can rest easy knowing I have sold 99.7% of the homes I have placed on the market, with an average of only 39 days on the market. I cover–– Alexandria, Arlington, Burke, Centreville, Chantilly, Dunn Loring, City of Fairfax, Falls Church, Great Falls, Herndon, McLean, Oakton, Reston, Tysons Corner, Vienna, or everywhere in Northern VA.