Things to avoid after applying for a home loan

KNIEPER REAL ESTATE

Pam Knieper, Broker/Owner of Knieper Real Estate, is and has been the #1 Top Producer for more than 15 years in Hood County and running. She is known as the Waterfront Expert and the Authority on Real Estate.

Early in my real estate career I witnessed a lender withdraw loan approval literally while the buyer was signing the closing documents.  A few days before closing this buyer bought a new boat and financed it.  When the lender ran a last-minute check for any changes to his credit, they discovered that new loan.  The payment for that new boat was high enough to throw his ratios off and he no longer qualified for the home loan. He got the boat, but not the lake house he was planning to dock it at.  That was when I learned a powerful lesson about educating buyers on things to avoid after applying for a home loan.

Once you’ve applied for a mortgage, here are some key things to keep in mind.

- Don’t Make Any Large Purchases:  Any large purchase will be a red flag.  People with new debt have higher debt-to-income ratios. 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 and especially not boats…LOL

- 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 the proper way to document your transactions with your loan officer.

- Don’t Co-Sign Loans for Anyone: When you co-sign for a loan, you’re making yourself accountable for that loan’s repayment which means a higher debt-to-income ratio. Even if you promise you won’t be the one making the payments, your lender will count the payments 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 you have your credit report 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 mortgage 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 aspects of your score.

- Bottom Line: If you want your home purchase to go as smoothly as possible remember to consult your lender before you make any large purchases, move your money around, or make any major life changes, because the wrong financial decision could cost you your dream home.

If you have questions about today’s topic or any real estate questions, we would love to hear from you.  Please feel free to call us at 817-219-0456 or contact us online at www.WeSellGranbury.com

Portions of this article were sourced, with permission, from www,KeepingCurrentMatters.com

pamK@knieperteam.com | 817-219-0456