When you apply for a home loan, your lender will go to great lengths to determine your credit-worthiness. That is, how likely you are to make all your monthly payments on time, and how big of a risk you are for defaulting.
To help make this decision, your lender will carefully scrutinize your financial history. The results from this inquiry will help determine what kind of loan you qualify for, if you qualify for one at all. It will also determine what kind of interest rates you can expect.
Ultimately, your lender is looking for financial consistency. As such, while you’re going through the mortgage application process, it’s in your best interest to abide by some basic financial discipline. In particular, there are a few things we recommend you avoid while your finances are under the lender’s microscope.
What Not to Do in the Mortgage Application Process
Here’s a list of six things to be aware of:
–Avoid making major purchases: while your mortgage application is being processed (and really up through the closing of your home), it’s advisable not to make any big purchases, such as a new car or new furniture, or to go on any pricy vacations. Hold steady!
–Remain consistent in your employment: your lender will want to know that you’re bringing in a steady income. In other words, don’t quit or try to change jobs until the process is complete!
–Avoid moving funds around: if you can help it, don’t transfer funds between your bank accounts, or making any big withdrawals or deposits. If you absolutely have to, consult with your mortgage lender first.
–Also avoid paying off debts or collections: unless you are advised to do so by your mortgage professional. (Do keep making your regular monthly bill payments, of course.)
–Don’t make a good-faith deposit in cash: the reason for this is simple: cash is difficult to verify, and while it’s not wrong to make a cash deposit, it might cause a delay in your closing.
–Avoid having your credit score pulled: doing so can cause your overall credit score to go down. If you’re still shopping around with different lenders, don’t give them permission to pull your credit score until you’re truly ready to move forward.
Move Forward with Your Mortgage
When you’re ready to proceed, abide by these principles of financial discipline—and if you have any questions, don’t hesitate to ask one of our mortgage professionals. Loan Fleet is here to advise you, and to guide you through the mortgage process. Contact our experts today to learn more!