Congratulations! You’ve found a home to buy and have applied for a mortgage! You’re undoubtedly excited about the opportunity to move into your new home and make it your own. However, before you make any large purchases, move your money around, or make any big-time life changes, consult your loan officer. Your loan officer will be the one guiding you throughout the loan process and will be able to tell you how your decisions will impact your home loan.
We recently made a video talking about the do’s and don’ts when applying for a mortgage. You can watch that below.
Don’t Do These When Applying for a Mortgage
The following list is all things you shouldn’t do after you’ve applied for a mortgage.
1. Don’t Change Jobs or the Way You Are Paid at Your Job
Your loan officer must be able to track the source and amount of your annual income. If possible, you’ll want to avoid changing from salary to commission or becoming self-employed after you apply for a mortgage.
2. Don’t Deposit Cash into Your Bank Accounts
Lenders need to source your money and cash is not really traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.
3. Don’t Make Any Large Purchases Like a New Car or Furniture for Your New Home
After applying for a mortgage it can be tempting to start shopping for new decorations and furniture. You need to resist this temptation! New purchases can come with new debt, including new monthly obligations. New obligations create new qualifications. Not to mention, people with new debt have a higher debt to income ratio. Higher ratios make for riskier loans and sometimes qualified borrowers no longer qualify thanks to their new purchase.
4. Don’t Co-Sign Other Loans for Anyone
When you co-sign, you are obligated for another loan. As we mentioned, that obligation comes with higher ratios as well. Even if you swear you will not be the one making the payments, your lender will have to count the payments against you. This can result in you missing out on your dream home!
5. Don’t Change Bank Accounts
Remember, lenders need to source and track assets. That task is significantly easier when there is consistency among your accounts. Before you even transfer any money, talk to your loan officer.
6. Don’t Apply for New Credit
It doesn’t matter whether it’s a new credit card or a new car. If you’ve recently applied for a mortgage, wait! When you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO® score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.
7. Don’t Close Any Credit Accounts
Many clients erroneously believe 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. Lenders don’t just look at your payment history. They will look at your total usage of credit as a percentage of available credit. Closing an account has a negative impact on both of those and can sink your score.
If You Haven’t Applied for a Mortgage Yet
If you haven’t applied for a mortgage yet, bravo! You are doing lots of great research. Some more resources for you are listed below. If you are thinking about buying a house, we are here to help you find your dream home. Simply fill out the form below or give us a call at 562.896.2456. In the meantime, do some of the fun stuff and start looking at homes for sale HERE. Happy house hunting!