So, you’ve applied for a mortgage (or at least prequalified) and found the home of your dreams. Hooray! The transaction is sailing along smoothly with your trusty Realtor at the helm. No doubt you’ve already mentally furnished, decorated and moved into your personal palace and you’re anxious to have it all done. But WAIT! Before you make ANY large purchases or ANY other changes to your financial situation, please consult your loan officer to be sure it won’t affect your ability to close! Below are the top 10 things to be aware of that could cause trouble in Dreamhomeland:
1. Don’t Quit Or Change Jobs Or The Way You’re Paid. Your mortgage company must track the amount and source of your income. If at all possible, you should avoid switching employers, changing from salary to commission or becoming self-employed.
2. Don’t Apply For ANY New Credit Or Financing. Whether it’s a credit card, store account or auto loan, applying for credit affects your FICO (credit) score. It could also affect your interest rate and your debt to income ratio and prevent you from qualifying at all, even if you don’t actually use the account. This includes short term or pay-day loans!
3. Don’t Close Any Credit Accounts. Yes, this may sound crazy, but having less available credit won’t necessarily make a buyer less “risky”. Length and depth of your credit history are all taken into account as well as how much of your open credit is used. Closing accounts can actually have a negative impact on your credit score.
4. Don’t Make Any Large Purchases. We know you’re excited to have new furniture, fancy appliances, or a shiny new car in your driveway, but even large cash purchases can throw off the numbers and prevent you from qualifying at closing.
5. Don’t Co-Sign Any Loans. Whether you’re technically paying the debt or not, you’re responsible for it and therefore it will figure into your ratios. In this case doing someone a favor may not end favorably for you, so it’s best not to be overly generous.
6. Don’t Deposit Cash Into Your Bank Accounts. Especially large but even smaller amounts have to be “sourced” by your lender so be sure any payments or proceeds deposited are made by check or transfer or discuss the proper way to handle it with your loan officer.
7. Don’t Switch Banks Or Change Accounts. Keep in mind your lender needs to track and source your assets which is much easier if you keep things consistent. Even transferring large sums should be discussed with your loan officer.
8. Don’t Pay Your Bills Late. This may seem obvious, but just because you pre-qualified when you first started house-hunting doesn’t mean the preliminary figures won’t be scrutinized. Your credit will be re-evaluated before closing and you don’t want anything negative popping up at the last minute.
9. Don’t Let Anyone Run A Credit Check On You. Points are deducted for inquiries, so no one but your mortgage company should be peeking into your credit history right now.
10. Don’t Ignore Questions From Your Lender. This probably also goes without saying, but your lender needs specific information for good reason so never withhold or falsify the answers or documentation they request.
My best advice? Full disclosure and open communication with your lender where it comes to ALL things financial from pre-approval to closing. Your loan officer is there to guide you through the mortgage process just as your Real Estate Agent guides you through the real estate transaction. When in doubt, talk it out…with your lender!
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