What Not to Do After Applying for a Mortgage

You’ve found the perfect home for sale in Albuquerque and applied for a mortgage. No doubt you’re all fired up to start buying what you need for your new home. But before you start making large purchases or moving money around, you should use caution. You could make decisions that could impact your mortgage adversely.

Here’s a list of things to avoid doing after applying for a mortgage.

1. Don’t Change Jobs or the Way You Are Paid at Your Job. 

The loan officer needs to be able to track your source of income and how much you’re paid. If possible, you’ll want to avoid changing from salary to commission or becoming self-employed during this time as well.

2. Don’t Deposit Cash into Your Bank Accounts. 

Cash is not as easy to trace for lenders. If you plan to deposit cash into your bank, check with your lender as to the proper way to document your deposit.

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

Making major purchases bring new obligations. And with that comes new qualifications. If you end up with a higher debt-to-income ratio, you may disqualify yourself from the loan.

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

When you co-sign, you are obligated. As mentioned before, with that obligation comes higher ratios as well. Even if you swear you will not be the one making the payments, your lender will have to count the payments against you.

5. Don’t Change Bank Accounts. 

Remember, lenders need to source and track assets. That task is significantly easier when there is consistency among your accounts. Before you even transfer any money, talk to your loan officer.

6. 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 affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.

7. Don’t Close Any Credit Accounts. 

Many clients erroneously believe that 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 in your score.

The main thing to remember is to discuss any changes in your finances with your loan officer to make sure that they will not affect your mortgage approval.