Things To Avoid After Applying for a Home Loan
In this competitive real estate market, you don’t want to do anything that will jeopardize your chances of securing your dream home. Some folks can pay cash for a home, but you will need to apply for a mortgage if you are like most people in the US. If you have applied for a mortgage, there are things to avoid after applying for a home loan so you don’t negatively impact your approval status.
As you navigate the loan approval process with your Oz Lending loan officer, they will let you know the things you need to avoid. So, while it’s exciting to start thinking about moving in and decorating, be careful when it comes to making any big purchases.
Here are a few things you may not realize you need to avoid after applying for your home loan.
Avoid Depositing Large Sums of Cash
Lenders need to source your money, and cash isn’t easily traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.
Don’t Make Any Large Purchases After Applying for a Home Loan
It’s not just home-related purchases that could disqualify you from your loan. Any large purchases can be red flags for lenders. People with new debt have higher debt-to-income ratios (how much debt you have compared to your monthly income). Since higher ratios make for riskier loans, borrowers may no longer qualify for their mortgage. Resist the temptation to make any large purchases, even for furniture or appliances.
No Co-Signing on Someone Else’s Loan
When you co-sign for a loan, you’re making yourself accountable for that loan’s success and repayment. With that obligation comes higher debt-to-income ratios as well. Even if you promise you won’t be the one making the payments, your lender will have to count the payments against you.
Keep Your Current Bank Accounts
Lenders need to source and track your assets. That task is much easier when there’s consistency among your accounts. Before you transfer any money, speak with your loan officer.
Site Tight Don’t Apply for New Credit After Applying for a Home Loan
It doesn’t matter whether it’s a new credit card or a new car. When you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), it will have an impact on your FICO® score. Lower credit scores can determine your mortgage interest rate and possibly even your eligibility for approval.
Don’t Close Any Accounts
Many buyers believe having less available credit makes them less risky and more likely to be approved. This isn’t true. 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 has a negative impact on both of those aspects of your score.
In Short, Consult an Oz Lending Loan Specialist
To sum it up, be upfront about any changes when talking with your lender. Blips in income, assets, or credit should be reviewed and executed in a way that ensures your home loan can still be approved. If your job or employment status has changed recently, share that with your lender as well. Ultimately, it’s best to fully disclose and discuss your intentions with your Oz Lending loan officer before you do anything financial in nature.
You want your home purchase to go as smoothly as possible. Remember, before you make any large purchases, move your money around, or make any major life changes, be sure to consult Oz Lending! Our mortgage advisors are qualified to explain how your financial decisions may impact your home loan and are here to help!
Oz Lending… There’s no place like home!