While it’s exciting to get preapproved for a home loan, and contract your dream home, there are some 7 key things to keep in mind before you close.
- Don’t Deposit Large Sums of Cash
Lenders need to source your money, and cash isn’t easily traceable. Before you deposit any amount of cash into your accounts, discuss with your lender the way to document the deposit.
- Don’t Make Any Large Purchases
This puts up a big RED FLAG! It could disqualify your loan! It could affect your debt-to-income ratio. Any large purchases can be red flags for lenders. Resist the temptation to make any large purchases, even for furniture or appliances.
- Don’t Cosign Loans for Anyone
When you cosign for a loan, you’re making yourself accountable for that loan’s success and repayment. 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.
- Don’t Switch Bank Accounts
Lenders need to source and track your assets. Always speak to your lender before making any transfer of money.
- 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 it will have an impact on your FICO® score. Lower credit scores can determine your interest rate and possibly even your eligibility for approval.
- Don’t Close Any 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, 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.
- Do Discuss Changes with Your Lender
Be upfront about any changes that occur or you’re expecting to occur when talking with your lender. Any expected changes in income, assets or credit should be discussed with your lender, so that it ensures your home loan can still be approved. If your job or employment will or has changed recently, share that with your lender as well. Always fully disclose and discuss your intentions with your loan officer before you do anything financial in nature.
In Conclusion
You want your home purchase to go as smoothly as possible. Remember, before you make any large purchases, move your money around, or make major life changes, be sure to consult your lender – someone who’s qualified to explain how your financial decisions may impact your home loan