January 06, 2022 at 8:27am | Jack Lara

Key Things To Avoid After Applying for a Mortgage

Key Things To Avoid After Applying for a Mortgage | MyKCMOnce you’ve found your dream home and applied for a mortgage, there are some key things to keep in mind before you close. It’s exciting to start thinking about moving in and decorating your new place, but before you make any large purchases, move your money around, or make any major life changes, be sure to consult your lender – someone who’s qualified to explain how your financial decisions may impact your home loan.
Here’s a list of things you shouldn’t do after applying for a mortgage. They’re all important to know – or simply just good reminders – for the process.

1. Don’t Deposit Cash into Your Bank Accounts Before Speaking with Your Bank or Lender.

Lenders need to source your money, and cash isn’t easily traceable. So, if your local Pensacola employer gives you a bonus, or you sell your 1965 Mustang convertible for a hefty profit, please let your lender know.  You will want to discuss the proper way to document your transactions with your loan officer.  

2. Don’t Make Any Large Purchases Like a New Car or Furniture for Your Home.

New debt comes with new monthly obligations. New obligations create new qualifications. People with new debt have higher debt-to-income ratios. Since higher ratios make for riskier loans, qualified borrowers may end up no longer qualifying for their mortgage.  Hold off on going on shopping in Car City Pensacola!

3. Don’t Co-Sign Other Loans for Anyone.

When you co-sign, you’re obligated. 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.  If you're wanting to help someone out with their tuition costs at the University of West Florida, talk to your loan officer first.

4. Don’t Change Bank Accounts.

Remember, 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.

5. 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.), your FICO® score will be impacted. Lower credit scores can determine your interest rate and possibly even your eligibility for approval.

6. Don’t Close Any Credit Accounts.

Many buyers believe having less available credit makes them less risky and more likely to be approved. This isn’t true. 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. Closing accounts has a negative impact on both of those determinants of your score.

Bottom Line

Any blip 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. The best plan is to fully disclose and discuss your intentions with your loan officer before you do anything financial in nature.

For those of you who like statistics here you go. By the way, I like stats because it helps me understand the market which in turn lets me help you to make an informed decision.



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Jack Lara, Broker-Associate
eXp Realty, LLC
(850) 616-6377
Jack@PensacolaAreaProperties.org
"Your Real Estate Advisor" Proudly Serving the Pensacola Florida Area since 1999
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