Here are five things you shouldn’t do during the loan approval process.
Buying a home is exciting, but don’t let the excitement get in the way of the loan process. If you don’t have your ducks in a row, your mortgage approval could be delayed, and that could lead to you missing out on the home altogether. That’s why today I want to go over what not to do during the loan process:
1. Don’t apply for new credit. Your credit can be pulled at any time up until closing day. Any changes could alter the terms of the deal or torpedo it outright. Try not to apply for any other loans or take on more debt during the approval process. Not only will it negatively affect your credit, but it could cost you your loan.
2. Don’t miss payments. Payment history is one of the most important parts of your credit score. Make sure you don’t lose track of your bills during the home-buying process.
3. Don’t make other large purchases. It can be tempting to buy furniture, appliances, or other important home items, but it’s a bad idea. Paying cash will deplete your savings fast, and paying credit will increase your debt-to-income ratio. Experts recommend keeping your credit utilization under 30% to maintain a good credit score, so wait until after you close to make big purchases.
4. Don’t change jobs. Sometimes this is out of our control, but if you can help it, don’t actively look for a job during the loan approval process. If your career change comes with a different income, it could affect your ability to get a loan.
5. Don’t make large deposits without a paper trail. To a lender, big deposits are a warning sign of recently borrowed money and a higher debt-to-income ratio. Either of these will affect your chances of getting a mortgage. If you have a paper trail to prove you have the funds, it should be okay, but make sure your lender sees them before they make assumptions.
Hopefully, you found these tips helpful. If you have questions about today’s topic or anything else, please call or email me. I am always willing to help.