Essential Do's and Don'ts After Applying for a Home Loan
Did you know securing a home loan isn't a done deal until the final closing? It's true! Any financial changes between your application submission and the final signing can impact loan approval. To help you navigate this critical stage successfully, here's a friendly reminder of what to avoid after applying for your home loan.
Steer Clear of Depositing Large Sums of Cash
The lenders assessing your loan application need to track the source of your money. Depositing large amounts of cash can be challenging to trace. To ensure transparency, talk with your mortgage professional to understand how to document such transactions.
Be Cautious with Big Purchases
It's not just home-related purchases that impact your loan eligibility. Any significant purchases can raise concerns for lenders. When you add new debt, your debt-to-income ratio increases, potentially affecting your mortgage approval. So resist the temptation to make large purchases, even for furniture or appliances.
Say No to Cosigning Loans
When you cosign a loan, you take on the responsibility for its repayment. However, this also increases your debt-to-income ratio. Even if you're not the one making the payments, lenders consider them when evaluating your loan application.
Avoid Switching Bank Accounts
Consistency among your accounts makes it easier for lenders to track and verify your assets. Before transferring funds between accounts, it's important to consult your mortgage professional to ensure a smooth process.
Steer Clear of Applying for New Credit
Whether it's a new credit card or a car loan, applying for additional credit can have consequences. Multiple credit inquiries from different financial institutions can impact your FICO score. Lower credit scores may influence your interest rate and even your eligibility for loan approval.
Refrain from Closing Any Accounts
Some believe that closing credit card accounts can lower their risk profile and increase the chances of loan approval. However, that's not necessarily true. Your credit score depends on various factors, including the length of your credit history and your credit utilization ratio. Closing accounts can negatively impact these aspects of your credit score.
Be Forthcoming About Any Financial Changes
Let your mortgage professional know about any changes in your financial situation. This includes fluctuations in income, changes in assets, or adjustments to your credit profile. By sharing this information, you can work together to ensure your home loan approval stays on track.
It's best to always disclose and discuss your financial intentions with your mortgage professional before making any significant financial decisions.
A smooth home purchase experience is the ultimate goal.
Before making large purchases, moving your funds around, or undergoing major career changes, consult your mortgage professional to provide insights into how your financial decisions may impact your home loan. Your home purchase may depend on it. Did you find this information helpful? Please share it with anyone you know who’s considering buying a home!
* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.