5 Things You Should Never Do Once Approved for a Home Loan
5 Things You Should Never Do Once Approved for a Home Loan – Once you gain a pre-approval offer from the lender, you must avoid doing certain things. This is because the lender evaluates your assets, debt, credit, and income. Some actions may affect your credit score, which in turn can lead to a delay in mortgage closing or not getting mortgage approval at all. The actions to avoid include:
Making any large purchases
You should avoid buying anything expensive involving the use of cash or credit. Buying costly items decreases your savings which are needed to make a down payment for the home. Also, charging large purchases to your credit card raises your debt-to-income ratio, and credit utilization negatively impacts your credit score. Economists have recommended that credit utilization should be kept under thirty percent to sustain a good credit score. Therefore, one should refrain from making any large purchases at least until the loan is closed.
Making large deposits without a paper trail
Usually, large deposits (generally over one thousand dollars) are a sign of somebody obtaining other loans leading to a higher debt to income ratio. If you make sizeable deposits, the loan officer will need to see a paper trail to account for it. If you fail to leave a paper trail, the loan process may be delayed or ultimately denied. Payroll deposits and transfers between accounts are accepted.
If you get a job offer and you are considering starting a new job, it is advisable to hold on until the loan closes. There is a risk of unemployment at a new job which leads to loan disapproval. Also, a job change may involve much documentation, thereby slowing down the loan process. Income adjustments also come with a job change, meaning the loan process must be revisited and adjusted accordingly. Additionally, lenders check your employment history for assurance of stable employment and income. It is advisable to remain at the same job before the loan is finalized.
Missing bills, credit cards, and loan payments
Your credit score largely depends on your payment history. It is essential to pay your financial obligations when due because any late payment can negatively affect your credit score leading to you getting disqualified from the loan.
Applying for new credit
Applying for a new line of credit can negatively affect your credit score as it increases your debt-to-income ratio. It would be best if you continued using your existing lines of credit until your mortgage closes, then you can apply for a new one.
In case of any other situations, it is advisable to speak to a mortgage professional for advice. Once you get that valuable pre-approval letter make sure you don’t do anything to disrupt your chances of getting a great loan and a great home
Have more questions? Need to connect with a great lender in the Orlando real estate market? Contact us below. We’ve worked with several great lenders in our area to get you the best loan for your needs and budget.
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