Here are the five things that will ruin your mortgage application right away.
Today I want to talk about what NOT to do after you’ve applied for your mortgage. These five steps could really screw up your mortgage application and kill your home purchase before it begins:
1. Don’t change bank accounts. This signals to lenders that you might be trying to hide something. During the home-buying process, stay where you are at until after closing or the process could be delayed by months.
"Large purchases are a major red flag to lenders."
2. Don’t apply for or close any credit cards. Even if they have a $0 balance, leave them be. Banks don’t like change. Also, a lot of your credit score has to do with the available credit you have versus how much you’re currently using. Any sudden change in your debt ratio will cause flags to go up and could kill your mortgage application.
3. Don’t make any large purchases. I can’t tell you how many times I’ve been helping a homebuyer and everything’s going great. Then right before closing, they go buy a new car, new couch, or a new bedroom set with credit to celebrate the purchase of their house. This is a major red flag to lenders and, like everything else, should only be done after you close.
4. Don’t make large deposits into your account. If you have a family member who wants to help with your down payment or closing costs, that’s fantastic. However, make sure that the money is in your account for at least three full months before you make your mortgage application. All the money in your account has to be explained, and all large cash deposits must be looked into by the lender. Be very careful about any big deposits like this.
5. Don’t cosign for another loan. It makes you responsible for that loan, and if it goes into default, it’s on you and your financial health is at risk. The best plan is to be fully transparent with your agent and loan officer.
If you have any questions, be sure to reach out via phone or email. I look forward to hearing from you soon.