We were all sitting around the closing table; the closing attorney and me. Just waiting for my homebuyer. Several calls and several emails but still no response. My buyer was more than 30 minutes late. When I spoke with him that morning, he said that he had a couple of errands to run before closing. Then, the phone rang, it was the lender. They had just run a last-minute credit report and my buyer had just bought a car! And not any car…a BRAND-NEW LEXUS!!
There are many things that you shouldn’t do after applying for a mortgage! Buying a Lexus is one of them. Luckily, we were able to address the situation and we were able to close, but not without an untimely delay.
Once you’ve found the right home and have submitted the paperwork for your mortgage, there are many things to keep in mind before you close. You’re undoubtedly excited about the opportunity to decorate your new place, but before you make any large purchases, move your money around, or make any major life changes, consult your lender – someone who is qualified to tell you how your financial decisions may impact your home loan.
Below is a list of things you shouldn’t do after applying for a mortgage. They’re all important to know – or simply just good reminders – for the process.
Don’t Make Any Large Purchases Like a New Car or Furniture for Your New Home
Buying something expensive, like a new car or boat, could cause you to lose the ability to get a mortgage. If you have to take out a loan or put that charge on a credit card, it could affect your credit score and debt-to-credit ratio. Even if you have a lot of cash to cover the cost, depleting your account may cause you not to have enough cash on hand for the down payment of the home, closing costs, insurance, and other related costs.
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 impacted. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.
Don’t Co-Sign Other Loans for Anyone
When you co-sign, you’re obligated. With that obligation comes higher ratios as well. Even if you promise you won’t be the one making the payments, your lender will have to count the payments against you.
Don’t Close Any Credit Accounts
Closing a credit card will not necessarily improve your credit score. If by closing a credit card account it causes your debt-to-credit ratio to skyrocket, your credit rating could take a dive.
Don’t Deposit Cash into Your Bank Accounts Before Speaking with Your Bank or Lender
Lenders need to source your money, and cash is not 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 Change Bank Accounts
Remember, lenders need to source and track your assets. That task is significantly easier when there’s consistency among your accounts. Before you transfer any money, speak with your loan officer.
Don’t Change Jobs or the Way You Are Paid at Your Job.
Your loan officer must be able to track the source and amount of your annual income. If possible, you’ll want to avoid changing from salary to commission or becoming self-employed during this time as well.
Other Posts from Our Blog
How a Change in Mortgage Rate Impacts Your Homebuying Budget: Link
Mortgage Q&A w/Luke: Link
Patience is the Key to Buying a Home This Year: Link
About Log Pond Realty
Home is where your story begins. Home is where hopes and dreams are born, memories are made, and lives are lived. We would love the opportunity to assist you in writing your new story.
We service the Triangle region of North Carolina including Raleigh, Cary, Apex, Holly Springs, Morrisville, Fuquay-Varina, Durham, Chapel Hill, Wake Forest, and Garner.
Contact us 919.589.3576 | firstname.lastname@example.org