Making Finances Simple. Changing Lives.
Your actions prior to (and during) the process of obtaining a home loan are very important. There are specific things you do NOT want to do during this time. Here is a list of those things you should steer clear of when you are seeking to obtain financing for a home.....
1. Don’t change jobs!
A new job may involve a probation period, which must be satisfied before income from the new job can be considered for qualifying purposes.
2. Don’t open or close any credit accounts!
This will have a negative impact on your credit score. Opening and/or closing accounts may disqualify you from getting the loan, or affect your interest rate.
3. Don’t pack or ship information needed for the loan application!
Important paperwork such as W2 forms, divorce decrees, tax returns, etc. should not be sent with your household goods. Duplicate copies take weeks to obtain, and could stall the closing date on your transaction.
4. Don’t have credit reports run during this time!
This will show as an inquiry on your lender’s credit report. Inquiries must be explained in writing and can potentially decrease your credit score.
5. Don’t forget to make your payments on time!
Every time you make a late payment or skip a payment altogether, your FICO scores drop significantly. It is possible for the score to drop over 50-100 points which can put your home loan application at risk.
6. Don’t charge existing credit cards beyond their current levels!
It is very important to keep all account balances at (or below) their current levels. Increasing the proportion of balances to high credit limits on revolving accounts will negatively affect your credit and thus, have a negative impact on your loan. Try to keep each and every revolving card balance at or below 30% of the high credit limit.
7. Don’t make any big purchases!
Big purchases such as furniture for your home, buying or leasing an automobile, etc. can increase the amount of debt you are responsible for on a monthly basis. This not only cuts down on the available funds you need in order to meet closing costs, but also creates the possibility that you can be disqualified from getting the loan.
8. Don’t move assets from one bank account to another!
These transfers show up as new deposits and complicate the application process, as you must then disclose and document the source of funds for each new account. The lender can verify each account as it currently exists. You can consolidate your accounts later if you need to.