Applying home loan can be fraught with peril. However, once you get through the mortgage pre-approval process, you can rest easy in knowing that the lender is likely to fund your home loan.
However, the key word here is likely. At this stage of the game, your mortgage could still fall through – and that may happen if your credit conditions change. To make sure you don’t derail your home loan application, don’t do any of the following until after closing day.
Don’t Quit Work or Change Jobs
The amount of your mortgage largely depends upon your income, and lenders look for employment stability. If you quit work, switch jobs or make a complete career change during the home loan process, you put your mortgage at risk.
Don’t Forget to Pay Your Bills on Time
Bill payment history is a major determining factor of your credit score, and if you’re late paying even a single bill, your score could drop. If that happens, the lender may not agree to fund your home loan, or the terms of your mortgage could change.
Don’t Open Any New Credit Accounts
Mortgage lenders look at all open debt, even if nothing is owed, and obtaining new credit could alter the terms of your home loan or even tank it completely. Applying for any type of credit account during the lending process is a bad idea.
Don’t Make Any Large Credit Purchases
Putting a major purchase on a credit card you already have is fine, right? Not so fast – large credit purchases affect your debt-to-income ratio, and that could have an adverse effect on your final mortgage.
Don’t Close Any Major Credit Accounts
Paying off an old account might seem smart but doing so before closing day will reduce your available credit and increase your debt-to-credit limit ratio. As a result, you could face a higher interest rate or the mortgage lender may deny your loan.
Don’t Pay Off Your Car Loan
Similarly, reducing your debt obligations by paying off a car loan sounds like a solid plan, but is actually a mortgage mistake. Having a history of debt repayment benefits your credit score, and if you pay off the total after applying for a mortgage, your score may fall below the lender’s guidelines for approval.
Don’t Make Unusual Bank Deposits
To a mortgage lender, large bank deposits often look like newly-borrowed money, which has a definite impact on your debt-to-income ratio. If you must deposit a significant amount of cash be prepared to explain and provide documentation. Otherwise, your lender could think twice about funding your home loan.
Keep in mind that any changes in assets, debts or personal income could affect the terms of your home loan or lead to a rejection. If you need expert advice on keeping your mortgage on track, turn to the professional team at Intercap Lending.
After successfully guiding more than 15,000 individuals and families in northern Utah down the path to home ownership, Intercap Lending has grown to become a trusted leader in the mortgage lending industry. We’ll do everything we can to help ensure your home loan gets funded as quickly as possible. For more mortgage information, contact our Orem office today.