Terryl Carl
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Once you’ve applied for a mortgage to buy a home, there are a few things you may not realize could affect your home loan acceptance. While it’s tempting to buy house decorations, be careful when it comes to making any big purchases. Here are a few things you may not realize you need to avoid after applying for your home loan.
Lenders need to source your funds, and cash is difficult to track. Before you deposit any funds into your accounts, consult with your loan officer about the best manner to document your transactions.
It’s not simply home-related purchases that might cause you to lose your loan. Lenders may raise an eyebrow if you make a major buy. People who have taken on new debt have greater debt-to-income ratios (how much debt you have compared to your monthly income). Because greater ratios result in riskier loans, borrowers may no longer be able to get mortgages. Resist the need to make significant purchases, especially if they are for furniture or appliances.
When you co-sign for a loan, you hold yourself responsible for its success and payback. Higher debt-to-income ratios accompany that obligation. Even if you guarantee that you will not be making the payments, your lender must count the payments against you.
Lenders must locate and track your assets. When your accounts are consistent, this work becomes considerably easier. Speak with your loan officer before transferring any funds.
It makes no difference if it’s a new credit card or a new automobile. Your FICO® score will be affected if you have your credit report run by firms in several financial channels (mortgage, credit card, auto, etc.). Lower credit scores might affect your mortgage interest rate and potentially even your approval.
Many buyers assume that having less financing available makes them less risky and hence more likely to get accepted. This is not correct. Your length and depth of credit history (rather than just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both of those aspects of your score.
To summarize, be honest with your lender about any changes. Changes in income, assets, or credit should be assessed and implemented in such a way that your house loan may still be granted. If your work or employment status has recently changed, notify your lender. Finally, before you do anything financial, it’s advisable to thoroughly disclose and discuss your goals with your loan officer.
You want everything to go as smoothly as possible with your property purchase. Remember to visit your lender before making any substantial purchases, moving your money, or making any major life changes – someone who is equipped to explain how your financial actions may effect your house loan.
