What Not to Do When Securing Your Mortgage Financing
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It’s essential to follow these guidelines to avoid jeopardizing your mortgage application, especially after it has been approved and is ready to close.
Tip 1: Do Not Change Jobs
Changing jobs, becoming self-employed, or quitting your job can significantly impact your mortgage approval. Any change in employment status must be factored into your application, and new income sources may not be accepted by lenders, depending on the situation.
Tip 2: Do Not Buy a Vehicle
Adding an auto loan to your financial profile can reduce your mortgage affordability. Taking on a vehicle loan will decrease the amount you can borrow for your home, as lenders will need to update your application to reflect this new debt.
Tip 3: Do Not Use Credit Cards Excessively
Running up your credit card balances or failing to pay them off can negatively impact your credit score. Lenders view high credit card debt as a risk, which could jeopardize your mortgage approval.
Tip 4: Do Not Spend Money Set Aside for Closing
It’s crucial to leave the funds you’ve saved for closing costs untouched. These funds will be needed for legal fees, taxes, potential land transfer taxes, and other closing expenses.
Tip 5: Do Not Omit Debts or Liabilities
Failing to disclose all debts or liabilities on your mortgage application can be detrimental. Lenders will uncover any omitted debts through documentation, and this could delay or jeopardize your approval.
Tip 6: Do Not Buy Furniture
Financing furniture before your mortgage is finalized can put your approval at risk. While it’s tempting to furnish your new home, adding this debt to your financial profile could strain your budget after the down payment and closing costs.
Tip 7: Do Not Originate Credit Inquiries
Avoid applying for new credit during the mortgage process. Multiple credit inquiries can temporarily lower your credit score and raise concerns with lenders about your financial stability.
Tip 8: Do Not Make Large Deposits Without Approval
Large, unexplained deposits into your bank account can raise red flags for lenders. Always communicate with me and seek approval for significant deposits to ensure your application remains on track.
Tip 9: Do Not Change Bank Accounts
Switching bank accounts during the mortgage process can complicate documentation and delay approval. It’s best to wait until your mortgage is finalized before making any changes.
Tip 10: Do Not Co-sign a Loan
Co-signing a loan for someone else will add that debt to your financial profile, which can reduce the amount of mortgage financing you can secure.
