If you have just applied for a home loan, check out this video about what not to do so it doesn’t get denied:
Although it’s terrific to begin planning your move and decorating once you’ve filed for a home loan, there are some important considerations to make before closing. Following your loan application, there are a few things you should avoid.
Avoid Making Large Cash Deposits
Cash is hard to track down, and lenders need to know where you got your money. Talk with your loan officer about properly recording your transactions before depositing any large amounts of money into your accounts.
Avoid Making Any Major Purchases
You could lose your loan if you make purchases that are out of the ordinary. 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). With higher debt ratios, you’ll be a riskier loan, and may no longer be eligible for a home loan. Avoid the urge to make any significant purchases, including those for appliances or furnishings.
Don’t Cosign for Anyone’s Loans
You assume responsibility for the loan’s success and repayment when you cosign for it. Higher debt-to-income ratios result from that obligation. Your lender will have to count the payments against you even if you state that you won’t be the one making them.
Avoid Changing Bank Accounts
Lenders must locate and track of your assets, including your bank accounts. When all of your accounts are consistent, that work is significantly more straightforward. Speak with your loan officer prior to making any financial transfers.
Avoid Getting Any New Credit Or Cards
Having your credit report checked by businesses in numerous financial channels (mortgage, credit card, auto, etc.) will affect your FICO® score, regardless of whether you’re applying for a new credit card or a new car. Poor credit scores can affect your interest rate and perhaps even your approval eligibility.
Don’t Close Any Old 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) play a significant role in determining your credit score. Both of those parts of your score are lowered by closing any inactive accounts.
DO Communicate With Your Lender About Any Changes
When speaking with your lender, be totally honest about any changes that take place or that you anticipate taking place. Any changes to your income, assets, or credit should be carefully considered and handled so that your home loan will still be granted. Inform your lender as well if your employment situation has changed recently. In the end, it’s always preferable to be completely honest and open with your loan officer before making any financial decisions.
Summing It Up
You want everything to go as smoothly as possible when you buy a house. Remember to speak with your lender—someone qualified to explain how your financial actions may affect your home loan—before you make any significant purchases, money transfers, or other life changes.
If you are in the market for a new home, selling one that you have, or just have questions, reach out. You can contact us at 404-410-6465 or visit CompleteRealtyTeam.com.