If you're on the brink of homeownership, the excitement of envisioning life in your new home can be overwhelming. However, it's crucial to stay grounded and mindful of key considerations after applying for your mortgage and before closing the deal. Here's a comprehensive list of things to keep in mind during this crucial phase of obtaining your home loan.
1. Avoid Large Cash Deposits:
Lenders require transparent sourcing of funds, and cash transactions can pose challenges. Prior to depositing any substantial cash amounts, consult your loan officer to ensure proper documentation.
2. Steer Clear of Major Purchases:
Large expenditures, not limited to home-related ones, may jeopardize your loan eligibility. High debt-to-income ratios resulting from new debts can be risky for lenders. Resist the urge to make significant purchases, whether for furniture or appliances, during this period.
3. Refrain from Cosigning Loans:
Cosigning holds you responsible for another person's loan, impacting your debt-to-income ratios. Even if you won't be making the payments, lenders will consider these commitments. Avoid cosigning for anyone during the mortgage application process.
4. Maintain Consistent Bank Accounts:
Lenders track and verify your assets, and consistency among your accounts simplifies this process. Before transferring any funds, consult your loan officer to ensure a seamless verification process.
5. Avoid New Credit Applications:
Whether it's a credit card or a car loan, multiple credit inquiries from various financial sources can affect your FICO® score. Lower credit scores may impact your interest rates and mortgage approval. Refrain from applying for new credit during this critical time.
6. Don't Close Existing Accounts:
Contrary to common belief, reducing available credit doesn't necessarily enhance eligibility. Your credit score considers the length and depth of credit history and the percentage of credit used. Closing accounts can negatively impact these factors.
7. Open Communication with Your Lender:
Inform your lender promptly about any changes or anticipated changes in your financial situation. Whether it's income fluctuations, asset changes, or credit adjustments, open communication ensures your home loan remains on track. If your employment status changes, share this information with your lender for transparent and informed decisions.
In conclusion, a smooth home purchase journey is essential for a successful homeownership experience. Prior to significant purchases, fund transfers, or major life changes, consult your lender—a qualified professional who can guide you on the potential impact of your financial decisions on your home loan.