Have You Applied For A Mortgage?

Looking for a home is an exciting time! There are some key things, however, to keep in mind while you're out there searching for your dream home. Here’s a list of things you need to avoid doing after applying for your home loan.

Don’t Deposit 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. Many lenders will counsel you not to make any deposit over $100 without documenting the source.

Don’t Make Any Large Purchases

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. So don't go and buy that new couch or that set of stainless steel appliances until after you move in!

Don’t Co-sign Loans for Anyone

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. So don't be swayed by your sister's crying or your best friend's slaps on the back - don't co-sign any loans!

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

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 credit score. Lower credit scores can impact your 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. 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. It's counter-intuitive, but closing accounts has a negative impact on both of those aspects of your score.

Do Discuss Changes with Your Lender

Be upfront about any changes that occur or you’re expecting to occur 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. It's best to fully disclose and discuss things with your loan officer before you do anything financial in nature.

You want your home purchase to go as smoothly as possible, so be sure to consult your lender to explain how your financial decisions may impact your home loan.