It is all too common for mortgage applicants to delay, or entirely forfeit, a loan by making mistakes during the application process. There are a few things you simply should not to after applying for your loan to make sure the process is as smooth, simple, and successful as possible.
To start the process, talk with me to initiate the pre-qualification process. Next, follow these tips for what not to do after applying for a mortgage.
1. Don’t make large cash deposits
This tip may seem counterintuitive. Wouldn’t more money in your account be a good thing? In some cases, sure, but if the increased account balance comes from a large cash deposit, the underwriters will be unable to determine what the source of the cash is.
If you need to deposit a large amount of cash, talk with your loan officer first to determine the best way to document the funds and avoid throwing a wrench in the escrow process.
2. Avoid large purchases on credit
Even if it is a practical purchase, and one your are confident you can afford, avoid making any large purchase on credit until closing on your loan. This includes opening new credit accounts to buy an appliance, purchasing new furniture on a credit card, buying a new car with an auto loan, or any other purchase that requires you to take on new debt.
A new debt means a new debt-to-income ratio, which will require the underwriters to start over. Best case scenario, this will cause a delay in your escrow process. Worst case scenario? You may forfeit your loan approval and lose the house you are in escrow to purchase. Don’t risk it; just wait until you have closed on the home to make any large purchase.
3. Don’t co-sign for anyone
If you have excellent credit, congratulations! You may want to help a friend or family member by co-signing for them, but wait until after you close on your loan to do so. This will present a massive change in your financial situation that may result in losing your eligibility to take out the mortgage at all.
You also want to make sure that whatever you are co-signing for is something you will still be approved for after closing on your loan. Tell your friend or family member that co-signing will have to wait a few weeks.
4. Don’t switch bank accounts
Loan officers and underwriters need to be able to easily track your funds, and changing bank accounts makes it very difficult to do so. If at all possible, delay a change in banking until after your loan has closed to avoid unnecessary issues in the mortgage escrow process.
The same goes for transferring money. Avoid moving money around during this process unless you absolutely must. If you cannot avoid a large transfer for some reason, let your loan officer know to find out how you can best do so without causing unnecessary delay.
5. Don’t apply for new credit or increased credit limits
You may have heard that one way to improve your credit is to have higher credit limits or credit accounts with no to low utilization rates. This is true! However, once you are in the mortgage approval process, making changes to your credit in any way, even for the better, can cause delays.
Think of your credit score as being on pause during the mortgage approval process. This is not the time to make improvements or changes, which will usually just turn into delays and extra paperwork.
To find out more about qualifying to buy a home, contact us any time. Our loan officers are ready to walk you through the process, so schedule a time to talk with one of them. Contac Steelman Mortgages for all home loans in Roseville CA.
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