Congratulations, you have found ‘A House That Fitts’ and applied for a mortgage! Your mortgage pre-approval letter is in your inbox.
Now, that your mortgage pre-approval letter is in hand, there are some important things to keep in mind before you close. I know you are excited about the opportunity to decorate your new place, but before you make any large purchases, move your money around, or make any major life changes, consult your lender. A lender who is qualified to tell you how your financial decisions may impact your home loan.
Listed below are five mistakes you should avoid once you have decided to buy a home and you have your mortgage pre-approval. Each potential mistake is important to know or simply a good reminder for the mortgage loan approval process.
5 Mistakes to Avoid After Mortgage Pre-Approval
1. Avoid Large Purchases After Mortgage Pre-Approval
Do not purchase items like a new car or furniture for your new home. Pay cash for anything you may need, but do not create any additional debt.
2. Do Not Apply for New Credit
It does not matter whether it is a new credit card or a new car. When you have your credit report run by organizations in multiple financial channels, your score will be impacted. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.
3. Do Not Close Any Credit Accounts
Many buyers think that having less available credit makes them less risky and more likely to be approved. Wrong! 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 can have a negative impact on both of those determinants of your score.
4. Avoid Co-Signing a Debt
The co-signed debt will become your debt. It will make your debt to income ratio higher. Do not do it!
5. Do Not Deposit Cash into Your Bank Accounts Before Speaking with Your Bank or Lender
Lenders need to source your money, and cash is not easily traceable. Before you deposit any amount of cash into your bank accounts, discuss the proper way to document your transactions with your loan officer.
—- Bottom Line —-
Any blip in income can become a problem when looking for a home loan. Discuss any changes in employment status with your lender.
Disclose anything that might help or hurt your financial standing. Be open and honest with your lender. They are going to find out anyway.
Better to know about a problem earlier rather than later. It is wiser to let your lender know upfront so financial glitches can get resolved or addressed in advance.
Get your lender the documents they need as soon as possible. Remember, lenders want to loan you money. Make it easy for them!
If you’ve got a top notch real estate agent on your side now, consider yourself lucky. If not, give us a call at (205) 248-7353 or send us a message. We look forward to helping you find ‘A House That Fitts.’