Avoid These Common Mistakes When Applying For A Mortgage
Are you gearing up to buy your first home? It’s natural to start daydreaming about moving in and personalizing your new space. But hold on a second! There are some important things to keep in mind after you’ve applied for your mortgage and before you seal the deal. Here’s a run down of what you need to remember:
1.) Avoid Depositing Large Amounts of Cash: Lenders need to know where your money is coming from, and cash deposits can be tricky to trace. Before you deposit any cash into your accounts, talk to your loan officer about how to properly document your transactions.
2.) Hold Off on Big Purchases: It’s not just buying stuff for your new home that you need to hold off on. Any major purchases can raise red flags for lenders. When you take on new debt, your debt-to-income ratio goes up, which can make it harder to qualify for your mortgage. So, resist the urge to splurge on big-ticket items like furniture or appliances.
3.) Avoid Cosigning Loans: When you cosign for a loan, you’re essentially taking on responsibility for that loan. This can increase your debt-to-income ratio and affect your mortgage eligibility, even if you’re not the one making the payments.
4.) Don’t Switch Bank Accounts: Lenders need to keep track of your assets, and it’s easier for them to do that when you keep your accounts consistent. Before you move any money around, check in with your loan officer.
5.) Steer Clear of New Credit: Whether it’s a new credit card or a new car loan, applying for new credit can lower your credit score. This, in turn, can affect your interest rate and your chances of getting approved for a mortgage.
6.) Keep Your Accounts Open: Closing accounts might seem like a good idea, but it can actually hurt your credit score. Lenders like to see a long history of responsible credit use, so it’s best to keep your accounts open if you can.
7.) Communicate with Your Lender: If anything changes with your finances, let your lender know right away. Changes to your income, assets, or credit can impact your mortgage approval, so it’s important to keep your lender in the loop.
Remember, the key to a smooth home-buying process is communication. Before you make any big financial moves, make sure to talk to your lender to avoid any surprises down the road.