For most homebuyers, getting approved for a mortgage is key to buying a house. Many don’t realize they could jeopardize that by making a simple mistake.
Here are some things you should never do while applying for a mortgage:
Don’t Close Credit Cards
Many buyers think having less credit makes them look less risky. The opposite is true. Your credit score is based on the length and depth of your credit history. “So don’t close any credit cards,” says Kristen Davis, Sales Associate at ERA Justin Realty, “Having lines of credit you don’t use actually makes you look better to lenders.”
Don’t Open Credit Cards
Every time you apply for a credit card your credit report is run by the issuing company and your credit score is impacted. A lower score could mean a higher mortgage rate or even denial of a loan.
Don’t Change Bank Accounts
Lenders need to source and track your assets. Make it easier for them by keeping your current accounts until your mortgage is finalized. If you need to transfer money, speak with your loan officer first.
Don’t Co-Sign for Anyone
Don’t co-sign any loans for anyone while you’re in the middle of mortgage approval. It will affect your debt-to-income ratio. “Even if you won’t be the one making the payments,” says Jennifer Darby Metzger, Broker/Owner at ERA Justin Realty, “Your lender will still have to count the payments against you.”
Don’t Make Any Big Purchases
Just like co-signing, buying a new car will create a higher debt-to-income ratio, making you riskier to lenders. “Hold off on any big purchases that will require a loan,” says Davis, “Sometimes even small loans can make borrowers no longer qualified for their mortgage.”
Don’t Make Large Cash Deposits
Lenders need to source your money, and large cash deposits can set off red flags. If you need to put a lot of cash into the bank, speak with your loan officer to discuss the proper way to document your transaction.
What you do after applying for a mortgage is just as important as before you apply. Kristen Davis or any of the agents at ERA Justin can help you make sure to make all the right moves. Contact us by calling 201-939-7500.