Once youâ€™ve found your dream home and applied for a mortgage, there are some key things to keep in mind before you close. Itâ€™s 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 â€“ someone whoâ€™s qualified to explain how your financial decisions may impact your home loan.
Hereâ€™s a list of things you shouldnâ€™t do after applying for a mortgage. Theyâ€™re all important to know â€“ or simply just good reminders â€“ for the process.
Lenders need to source your money, and cash isnâ€™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.
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.
When you co-sign, youâ€™re obligated. With that obligation comes higher debt-to-income ratios as well. Even if you promise you wonâ€™t be the one making the payments, your lender will have to count the payments against you.
Remember, lenders need to source and track your assets. That task is much easier when thereâ€™s consistency among your accounts. Before you transfer any money, speak with your loan officer.
It doesnâ€™t matter whether itâ€™s 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 FICOÂ® score will be impacted. Lower credit scores can determine your interest rate and possibly even your eligibility for approval.
Many buyers believe having less available credit makes them less risky and more likely to be approved. This isnâ€™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.
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.