The Do’s and Don’ts after Applying for a Mortgage

Dated: December 21 2020

Views: 32

The Do’s and Don’ts after Applying for a Mortgage

The Do’s and Don’ts after Applying for a Mortgage | MyKCM

Once you’ve found the right home and applied for a mortgage, there are some key things to keep in mind before you close. You're undoubtedly excited about the opportunity to decorate your new place, but before you make any large purchases, move your money around, or make any major life changes, consult your lender – someone who is qualified to tell you how your financial decisions may impact your home loan.

Below is 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 is not easily traceable. Before you deposit any amount of cash into your accounts, 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 New Home. New debt comes with new monthly obligations. New obligations create new qualifications. People with new debt have higher debt-to-income ratios. Higher ratios make for riskier loans, and then sometimes qualified borrowers no longer qualify.

3. Don’t Co-Sign Other Loans for Anyone. When you co-sign, you’re obligated. With that obligation comes higher 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.

4. Don’t Change Bank Accounts. Remember, lenders need to source and track your assets. That task is significantly 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 maybe 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. Wrong. 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.

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Jeffrey Daniels does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Jeffrey Daniels will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

Latest Blog Posts

Pop Quiz: Can You Define These Key Terms in Today’s Housing Market? [INFOGRAPHIC]

Pop Quiz: Can You Define These Key Terms in Today’s Housing Market? [INFOGRAPHIC]Some HighlightsThe language of buying and selling a home may sound scary at first, but knowing how key terms

Read More

Today’s Real Estate Market Explained Through 4 Key Trends

Today’s Real Estate Market Explained Through 4 Key TrendsAs we move into the second half of the year, one thing is clear: the current real estate market is one for the record books. The exact

Read More

3 Charts That Show This Isn’t a Housing Bubble

3 Charts That Show This Isn’t a Housing BubbleWith home prices continuing to deliver double-digit increases, some are concerned we’re in a housing bubble like the one in 2006. However, a

Read More

What You Should Do Before Interest Rates Rise

What You Should Do Before Interest Rates RiseIn today’s real estate market, mortgage interest rates are near record lows. If you’ve been in your current home for several years and haven

Read More