If you’re getting ready to buy a home, it’s exciting to jump a few steps ahead and think about moving in and making it your own. But before you get too far down the emotional path, there are some key things to keep in mind after you apply for your mortgage and before you close. Here’s a list of things to remember when you apply for your home loan.
Don’t Deposit Large Sums of Cash
Lenders need to source your money, and cash isn’t easily traceable. Before you deposit any cash into your accounts, discuss the proper way to document your transactions with your loan officer.
Don’t Make Any Large Purchases
It’s not just home-related purchases that could disqualify you from your loan. Any large purchases can be red flags for lenders. People with new debt have higher debt-to-income ratios (how much debt you have compared to your monthly income). Since higher ratios make for riskier loans, borrowers may no longer qualify for their mortgage. 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 them against you.
Don’t Switch Bank Accounts
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.
Don’t Apply for New Credit
It doesn’t matter whether it’s a new credit card or a new car. When your credit report is run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), 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 (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 parts 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. Blips 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. Ultimately, it’s best to fully disclose and discuss your intentions with your loan officer before you do anything financial in nature.
Bottom Line
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.
Aaron Boone is a seasoned professional in the real estate industry, bringing a wealth of experience and a genuine commitment to helping individuals and families find their ideal homes. With a career that began in 2007, Aaron has established himself as a reliable and knowledgeable expert in the field, specializing in assisting people with relocation needs and seniors looking to downsize.
As a long-time resident of the community for over 30 years, Aaron possesses a deep understanding of the local market dynamics and trends. His educational background is equally impressive, holding degrees in education, human resources, and business management. This diverse foundation allows him to approach real estate with a comprehensive and well-rounded perspective.
Aaron’s professional journey has seen him excel in various facets of the real estate realm, including property management, marketing, technology solutions, accounting, and finance. His extensive skill set enables him to guide clients through the intricacies of buying or selling a home with confidence and efficiency.
What sets Aaron apart is his unwavering commitment to going above and beyond for his clients. He is known for being a compassionate and attentive advocate, offering support at every step of the real estate process. His approach is characterized by a unique blend of knowledge, care, and active listening.
Notably, Aaron is upfront and straightforward in his communication style. He believes in telling clients what they need to hear, not just what they want to hear, fostering a relationship built on trust and transparency. His ability to think outside the box allows him to find creative solutions to challenges that others might overlook.
In addition to his professional achievements, Aaron brings a folksy, down-to-earth approach to his work, making the journey to finding a dream home both enjoyable and stress-free. Whether it’s through his deep community roots, extensive expertise, or his genuine care for clients, Aaron Boone stands out as a dedicated and effective real estate professional.