Even when you have great credit, there are things you can do to make lenders think twice about approving your mortgage loan.
Most people focus on the initial credit check when applying for a mortgage loan, but that’s only the pre-approval stage; as the bank underwriters scrutinize your history they’ll ask for updated financial, employment and credit information. There are plenty of things you should not do until you go to settlement;
1.Don’t change your job before applying for a home loan. Along with that, now is not the right time to become self-employed or quit your job. You want to show lenders stability, which means you’ll be less likely to default on the loan.
2.Don’t change banks; you want your history to show stability.
3.Don’t buy a car or truck or any other form of transportation that you have to finance. Buying one increases your debt-to-income ratio and that’s something loan officers don’t want to see
4.Don’t buy furniture on credit before buying your house. Like financing a car, charging big-ticket items increases your debt-to-income ratio and now is not the time.
5.Don’t be late on your credit card payments or charge excessively. You need a track record of responsibility and show that you can manage your money.
6.Don’t make large deposits into your bank accounts. Lenders like the money that will be your down payment to be sitting in your account for at least two months – what they call “seasoning” – so that the funds don’t just appear out of the air.
7.Don’t co-sign a loan for anyone. Even if you’re not the one making the payments on that loan, it increases your debt-to-income ratio.
8.Don’t have inquiries made into your credit. Looking for new credit translates into higher risk for lenders. If your inquiries are related to your mortgage search, it usually doesn’t affect your credit score because the assumption is you’re rate shopping. But opening credit accounts within a short period of time represents some risk and your credit could take a hit. It’s probably not a huge factor in your calculating your ability to repay a loan but why take a chance at this juncture?
9.Don’t lie on your loan application. Sounds simple, right? But don’t leave out any debts or liabilities you have or fudge your income.
10.Don’t spend your money savings meant for closing costs. Part of the price of financing a loan is the closing costs and you’ll likely have some responsibility for paying them. Make sure you have enough for your share of the closing obligations.
It may be tempting to go shopping for “wants” and a few needs, but wait it out until the underwriting department has approved your loan application and you get the keys to your new home.