Six "Don'ts" After You Apply for a Mortgage

A friend who is a realtor posted this on FB, and I thought it might be helpful to the girls in this group. I know that I was surprised to read one or two of these things.

"I learned a long time ago that 'common sense is NOT common practice.' This is especially the case during the emotional time that surrounds buying a home, when people tend to do some non-commonsensical things. Here are?a few that I?ve seen over the years that have delayed (and even killed) deals:

1.) Don?t deposit cash into your bank accounts. Lenders need to source your money and cash is not really traceable. Small, explainable deposits are fine, but getting $10,000 from your parents as a gift in cash is not. Discuss the proper way to track your assets with your loan officer.

2.) Don?t make any large purchases like a new car or a bunch of new furniture. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher ratios?higher ratios make for riskier loans?and sometimes qualified borrowers are no longer qualifying.

3.) Don?t co-sign other loans for anyone. When you co-sign, you are obligated. With that obligation comes higher ratios, as well. Even if you swear you won?t be making the payments, the lender will be counting the payment against you.

4.) Don?t change bank accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is a consistency of accounts. Frankly, before you even transfer money between accounts, talk to your loan officer.

5.) 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.), your FICO score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.

6.) Don?t close any credit accounts. Many clients have erroneously believed that having less available credit makes them less risky and more approvable. Wrong. 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 those determinants of your score.

The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature. Any blip in income, assets, or credit should be reviewed and executed in a way to keep your application in the most positive light."
Posted on April 14, 2012 at 1:33 am
fromcoldtofire
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07/08/2011
fromcoldtofire

fromcoldtofire

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(2) Comments

nish0822
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08/22/2018
nish0822

nish0822

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nish0822

this is great advice. Our lender actually told us all these things before we even put "pen to paper" . Another piece of advice...i know its real hard when the process begins to not want to share with EVERYONE the excitment you're feeling, but if i could do it all again i wouldn't tell anyone until we were closing or closed. My FI lost his job 20 days after we had been approved for our mortgage by underwriting. Its so hard to see all those "excited' faces change when you explain why there's no moving truck outside yet.

Posted on April 14, 2012 at 2:08 am
Uhlease
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09/02/2012
Uhlease

Uhlease

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Uhlease

Great post~ thanks for sharing!

Posted on April 16, 2012 at 3:47 am

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