7 THINGS NOT TO DO AFTER APPLYING FOR A MORTGAGUE
By Annie Hawkins of Sovereign Associates
If you are applying for a mortgage following are some things you need to know so you don’t negatively affect your approval status.
Don’t apply for new credit—Whether it’s a new credit card or a new car, your FICO score will be affected when organizations in multiple financial channels run your credit card report. A low credit score can affect your interest rate or even your eligibility to be approved for a mortgage.
Don’t close any credit accounts—It’s a misconception that having less available credit reduces your risks and if you close some accounts, you are more likely to be approved. This is wrong. A significant factor of your FICO score is the length and depth of your credit history, not just your payment history.
Don’t change bank accounts—Lenders need to source and track your assets. Consistency with your bank accounts makes this much more manageable for them. Check with your loan officer even before transferring money between your accounts.
Don’t deposit large sums of cash into your bank accounts—Lenders will be interested in sourcing your money, and cash is hard to trace. Before you make any deposits into your accounts consult with you loan officer on the proper documentation of your transactions.
Don’t co-sign a loan for anyone—When you co-sign for someone else, you become responsible for the loan. This creates a higher debt to income ratio for you. Even if you are not making the payments your lender will still count the debt against you.
Don’t make large purchases such as furniture or a new car—If you add new monthly bills this brings new debt and increases your debt-to-income ratio. In a lender’s eyes this makes for a riskier loan, and this could disqualify you from the mortgage you had planned for.
Don’t change jobs or the way you’re paid at your job—Your loan officer has to track the amount as well as the source of your annual income. If it’s possible avoid becoming self-employed or changing to a commission-based income during the time you are applying for a mortgage.
Any changes in assets, credit or income should be reviewed and handled in a way that ensures you’ll be approved for your mortgage. Be transparent and discuss any plans with your loan officer before making any significant financial decisions. Your Sovereign Associates broker can recommend loan officers that are skilled in guiding you through the process and increasing your mortgage approval chances.
