Once you've found your dream home and applied for a mortgage, there are a few key things to keep in mind before closing. It's exciting to start thinking about moving into and decorating your new home, but before you make any big purchases, move money, or make any major life changes, let's get started. Remember to consult your lender - someone who is qualified to explain how your financial decisions may affect your home loan.
Here's a list of things you shouldn't do after applying for a mortgage. All of them are important to know - or just good reminders - to the process.
1. Don't put money into your bank account before talking to your bank or lender.
Lenders have to find their money, and it's not easy to track. Before you deposit any money into your account, discuss the correct way to record your transactions with your loan officer.
2. Don't make big purchases like a new car or furniture for your home.
With new debt comes new monthly obligations. New obligations create a new status. New debtors have higher debt-to-income ratios. Since this higher ratio makes loans riskier, qualified borrowers may not qualify for their mortgages.
3. Do not co-sign other loans to anyone. When you co-sign, you must do so.
This obligation also comes with a higher debt-to-income ratio. Even if you promise that you won't be the one to make the payments, your lender will have to charge the payments against you.
4. Don't charge your bank account.
Remember, lenders should research and monitor your assets. This task is much easier when there is consistency between your accounts. Before you transfer money, talk to your loan officer.
5. Does not apply to new credits. It doesn't matter if it's a new credit card or a new car. When your credit report is managed by organizations across multiple financial channels (mortgage, credit card, auto, etc.), your FICO® score will be affected. A lower credit score can determine your interest rate and may even qualify you for approval.
6. Do not close any credit accounts. Many buyers believe that having less credit makes them less risky and more likely to be approved. This is not the truth. A key component of your score is the length and depth of your credit history (as opposed to your payment history) and your total credit utilization as a percentage of available credit. . Closing your account has a negative impact on the two factors that determine your score.
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