As you prepare to purchase a home, the excitement of envisioning your move-in and personalization is understandable. However, before delving too deeply into the emotional journey, it's crucial to consider certain key aspects after applying for your mortgage and before the closing process. Here's a checklist of important reminders as you navigate the home loan application process.
Don’t Deposit Large Sums of Cash
Don’t Make Any Large Purchases
Don’t Cosign Loans for Anyone
When you cosign 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 them against you.
Don’t Switch 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.
Don’t Apply for New Credit
Whether it's a recent credit card application or a new car purchase, the activity on your credit report across various financial sectors (mortgage, credit card, auto, etc.) can influence your FICO® score. Lower credit scores can impact your interest rate and potentially affect your eligibility for approval.
Don’t Close Any Accounts
Some buyers mistakenly think that reducing available credit makes them appear less risky and increases their chances of approval. However, this is not accurate. A significant factor in your credit score is the length and depth of your credit history, along with your total credit usage as a percentage of the available credit. Closing accounts can adversely affect both aspects of your credit score.
Do Discuss Changes with Your Lender
When communicating with your lender, openly share any changes that have happened or are anticipated. Any fluctuations in income, assets, or credit should be carefully examined and managed to secure the approval of your home loan. If there have been recent alterations in your job or employment status, it's essential to inform your lender. Overall, it is advisable to fully disclose and discuss your financial intentions with your loan officer before taking any financial actions.
Ensuring a smooth home purchase process is crucial. Prior to making significant purchases, rearranging funds, or undergoing major life changes, it's essential to seek guidance from your lender—an expert qualified to clarify how your financial decisions might influence your home loan.