After months of searching, you’ve finally found the perfect house. Congratulations on your exciting milestone! While you’re undoubtedly excited about this opportunity, it’s a good idea to be careful during this time to avoid jeopardizing your application approval.
Some of the top things to avoid after applying for a mortgage include:
1. Don’t Deposit Large Sums of Cash Into Your Bank Account
Lenders need to source your money, and cash is often difficult to trace. Before making any large deposits, it’s wise to ask your loan officer how to properly document that money.
2. Don’t Change Your Bank Account
It’s essential to remember that lenders will always need to source and track your assets. A consistent bank account makes it easier for lenders to identify and track your funds. Talk to your loan officer before transferring any money to a new account.
3. Don’t Make Any Large Purchases
Making purchases such as furniture or a new car adds to your monthly debt and increases your debt-to-income ratio. For a lender, this higher debt ratio places you at a greater risk of being unable to repay your mortgage. In some cases, qualified buyers with new debt may no longer qualify for a home loan.
4. Don’t Change Jobs or How You Receive Payments
Your loan office will track how much you earn each week and your income source. If possible, avoid switching to self-employment or changing to a commission-based income during this time.
5. Don’t Co-Sign on Another Person’s Loan
When you act as a co-signer on a loan, you take on responsibility for ensuring the payments are made. Even if you are not paying on the loan yourself, the lender will still consider it to be new debt.
6. Don’t Start Applying for New Credit
Whether you’re applying for a new credit card or a vehicle loan, when you have your credit history checked by organizations across multiple channels, it will impact your credit score. Your credit score is a key determiner of the interest rate on your mortgage and may affect your loan eligibility.
7. Don’t Close Your Credit Accounts
Borrowers often mistakenly believe that limiting available credit will improve their chances of approval. However, a significant element of your credit report is the depth and length of your credit history. As such, closing accounts can negatively impact your score.
8. Don’t Miss Your Payments
Missing a bill or paying late will impact your credit score. Even one late payment can decrease your credit score to the point where you will no longer be eligible for your new mortgage. If you want to ensure you qualify for your mortgage, make sure you pay all of your bills on time.
Secure a Mortgage With Assurance Financial
At Assurance Financial, we want to help you secure a mortgage and achieve your dream of owning a home. Our team is here to simplify the process and educate you on what to avoid when getting a mortgage to prevent jeopardizing your application. We offer several mortgage options to meet your needs, including conventional, FHA, jumbo and VA loans.