Once you've applied for a mortgage to buy a home, there are some key things to keep in mind. While it's an exciting time to start thinking about moving in and decorating, be careful when it comes to making any big purchases. Hey, I'm Andy with the Mandel team at RE/MAX. Here's my list of things not to do when getting a mortgage.
Number one don't deposit, large sums of cash. Lenders need to source your money, and cash isn't easily traceable. Your money needs to be vested in your account for 60 days before buying, otherwise you'll likely have to provide letters stating where the money came from and the bank might have to trace it.
Number two, don't make any large purchases or apply for new credit. It's not just home related purchases that could disqualify you from your mortgage. Any large purchases can be red flags to lenders. Don't be that person that opens up a new credit card at the store you're shopping at during the closing process. Resist the temptation to make any large purchases, even for furniture or appliances that you're gonna need for the house until at least a few days after closing.
Tip number three, don't co-sign loans for anyone. When you co-sign a loan, you're making yourself accountable for that loan success and repayment. With that obligation comes higher debt to income ratios as well. Even if you promise that you won't be the one making the payments, your lender will have to count those payments against you.
Tip number four, don't switch bank accounts in the middle of the process. 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.
Tip number five, don't close any accounts. Many buyers believe having less available credit makes them less risky and more likely to be approved. This just isn't true. A major component of your credit 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. Closing accounts can have a negative impact on both of these aspects of your score.
Tip number six, when in doubt, ask the lender. You want your home purchase to go as smoothly as possible. Remember, before you make any large purchases, move money around, or make any major life changes be sure to consult your lender. We don't wanna see anything affect your ability to get the loan and you lose out on your dream home.Posted by Andy Mandel on