6 Things To Avoid After A Home Loan Application

 

There are several important considerations to make after submitting an application for a mortgage to purchase a property. Even though it's thrilling to begin considering moving in and decorating, use caution when making any significant purchases. Following your loan application, there are a few things you should probably steer clear of.

Avoid making large cash deposits.

Cash is difficult to track, and lenders need to know where you got your money. Talk with your loan officer about how to properly record your transactions before you deposit any money into your accounts.

Avoid making any expensive purchases.

You might not be eligible for your loan if you make purchases unrelated to your house. Lenders may raise concerns about any sizable purchases. Debt-to-income ratios are higher for those with new debt (how much debt you have compared to your monthly income). Borrowers may no longer be eligible for their mortgages since riskier loans have higher ratios. Avoid the urge to make any significant purchases, including those for appliances or furnishings.

Don’t co-Sign loans for anyone.

You assume responsibility for the loan's success and repayment when you co-sign for it. Higher debt-to-income ratios are also a result of that commitment. Your lender will have to count the payments against you even if you pledge that you won't be the one making them.

Avoid changing banks.

Lenders must locate and keep track of your assets. When your accounts are consistent, that work is significantly simpler. Speak with your loan officer prior to making any financial transfers.

Don’t apply for new credit.

Whether it's a new credit card or a new car, it doesn't matter. Your FICO® score will be impacted if you have numerous financial institutions (mortgage, credit card, auto, etc.) pull your credit report. Lower credit scores may affect your ability to obtain a mortgage and potentially your interest rate.

Don’t close any accounts.

Many purchasers think they are less risky and more likely to get approved if they have less accessible credit. That is untrue. Your total credit usage as a percentage of available credit and the length and depth of your credit history (as opposed to merely your payment history) both play a significant role in determining your credit score. Both of those parts of your score are negatively impacted by account closures.

Simply put, seek expert advice.

In conclusion, while speaking with your lender, be honest about any changes. Any changes to your income, assets, or credit should be carefully considered and handled so that your house loan can still be granted. Inform your lender as well if your employment situation or position have changed recently. In the end, it's always preferable to be completely honest and open with your loan officer before making any financial decisions.

You want everything to go as smoothly as possible when you buy a house. Always remember to talk to your lender, who is competent to explain how your financial actions may affect your home loan before you make any significant purchases, money transfers, or other significant life changes.