So, you are pre-qualified for a mortgage and you’re shopping for a home. You may think you’ve got it all under control, and nothing can stop you from buying your dream house, right? Oh no, you can absolutely blow this if you aren’t careful. Remember, we have a snapshot of your financial health at the time of your application to determine what we can get you in terms of a mortgage. When you change things, don’t divulge issues, or generally move money around, it changes your mortgage picture.
Most people are going to be fine. They won’t suddenly go nuts buying stuff or changing their life while they shop for a home. However, there are several behaviors that can end your quest for a home or change the parameters of what you will pay on your mortgage if you aren’t careful.
Keep your head about you, don’t do any of the next 6 things, and you’ll be moving in to your new home!
Don’t buy a new car or trade-up to a bigger lease
First lesson. Anything that changes your debt-to-income ratio scares the bank. You want everything to stay exactly the same for the life of the application process. Buying a new car drastically changes how much debt you have, and can drive you back to square one of the application process.
Don’t quit your job to change industries or start a new company
Changing professions is a huge red flag to the banks. This also applies to changing the TYPE of job from salaried to commission. The bank wants to know that you’re stable and will be able to make the payments, and moving from job to job shows them that, even if you’re getting a raise, it may not be permanent.
Don’t transfer large sums of money between bank accounts
When you apply for a loan, we need to know exactly where all of your money is. Jars filled with gold, buried pirate treasure, stocks, priceless artwork, whatever you have. It all goes into the pot together to give us a solid idea of your net worth and ability to make a mortgage payment. Moving money around after the approval can show that you got a new loan, which means new debt. Even if it’s innocent, it can transfer your loan back to the application process.
Don’t forget to pay your bills — even the ones in dispute
You may not think you need to pay a bill. In fact, you may be on the way to winning a court case or appeal that you have to. If it affects your credit, it doesn’t matter. Pay it and get your money back after the dispute. You can’t have negative items on your credit during this process.
Don’t open new credit cards — even if you’re getting 20% off
Oh, you’re saving 20% off of your new furniture? I don’t care. You need to keep your debt-to-income ratio where it is. Adding more debt during the buying process can end it.
Don’t accept a cash gift without filing the proper “gift” paperwork
We talked about this in an earlier blog. The “gift” paperwork lets us know that this isn’t a loan, and isn’t going to have to be paid back. If you don’t file it, it’s assumed to be a loan, and counts against your credit.
If you’re ready to take rising home rates and low interest rates and use them to your advantage, call us in St. Louis at (314) 781-9700, Chicago at (773) 770-4727, Indianapolis at (317) 550-1515 or Nashville at (615) 810-8555. You can always apply online at www.thehomeloanexpert.com, and we’re also open on Saturdays to better serve you. We work hard to make it easy on you. Nobody gets lower rates on better loans than The Home Loan Expert, Ryan Kelley, why go anywhere else?