So you’ve been approved for a mortgage – now what? Well, your mortgage lender is going to be re-checking your credit prior to your settlement and verify other details to make sure nothing has changed since the application period. This is the time to pay special attention to every detail of your spending and make sure things are the same as when you applied. If the lender notices any major changes, your home loan could be delayed or even cancelled. It is important to keep things smooth across the board until your mortgage is finalized, so be careful to avoid these common mistakes.
- Don’t Apply for a New Line of Credit
Every time you put in a credit application, your credit score is lowered. Not only will you lose a few points, but the lender could become apprehensive too. It could give them the impression that you intend on spending up to your credit limit which could result in defaulting on your home loan.
- Keep Current Accounts Open
While it is financially smart to close any unused credit accounts, it is best to make these changes after the loan has been settled. This is another move that will lower your credit score, so keep the accounts around until you have received your home loan.
- Always Leave Paper Trails
Prior to the settlement, your lender will need to see your recent bank statements. They could see unusual deposits, so be sure that you are able to provide documentation on where the money came from if necessary. An easy solution is to move all of the cash you intend to use for the home purchase into one account prior to beginning your mortgage application process.
- Do Not Increase Debt
Prior to signing off for your mortgage, the lender will recheck your credit score and your debt-to-income ratio. This means to avoid accruing any more debt than what has already been claimed. If you take on more debt, you risk going above the maximum acceptable debt-to-income ratio that was previously approved.
- Do Not Skip or Make Late Payments
It can be easy to get so caught up in preparing to move that you get behind on other bills. One of the most important elements of your credit score is history of on-time payments, so it could be detrimental to fall behind or miss any.
- Don’t Buy a New Car
Even if you’re able to afford a new car, it’s best to wait until after you’ve closed on your new home. Depleting your savings or taking on a new car loan could derail the mortgage application.
- Stay in the Same Job if You Can
Another way to delay your settlement would be changing jobs in the middle of the application process. You need to be sure that you have pay stubs readily available for the lender to verify employment.
- Keep Your Savings in Place
It is important to keep your funds in place until the settlement, since costs such as closing and down payment will be required. Before the time comes to pay, you don’t want to exhaust your hard-earned savings.
For more advice on being fully prepared to purchase a home, you can sit down with any of our certified realtors and brokers. Buying a home is an exciting but careful time and we are here to help!