Congratulations! You’ve found a home to buy and have applied for a mortgage! One thing that you might be really happy to do right now is to make some big purchases for your home, like a new couch or dining room set; but before you make any large purchases, move your money around, or make any big-time life changes, consult your loan officer because some things will impact your home loan.

Here are my top seven things that you shouldn’t do after you apply for a mortgage, just to keep you safe and make sure you can get to the closing table.

Transcript

Congratulations! You’ve found a home to buy and have applied for a mortgage! One thing that you might be really happy to do right now is to make some big purchases for your home, like a new couch or dining room set; but before you make any large purchases, move your money around, or make any big-time life changes, consult your loan officer because some things will impact your home loan.

Here are my top seven things that you shouldn’t do after you apply for a mortgage, just to keep you safe and make sure you can get to the closing table.

Tip 1: don’t change jobs or the way you are paid for your job.

The reason being, is your loan officer must track the source and amount of your annual income. If possible, don’t change from salary to commission, or become self-employed during this time as well.

If you are relocating, most lenders will require you to have a verifiable offer letter for you new position, and that you start your new position within 60 days.

Tip 2: don’t deposit cash into your bank accounts

Lenders need to source your money, and cash is not really traceable.

So if you are expected some sort of cash contribution, perhaps from a family member for your down payment, definitely consult with your loan officer about how you can document that cash deposits so that it doesn’t jeopardize your loan.

Tip 3: don’t make any large purchases

… like a new car or furniture for your new home. Because that is new debt including new monthly payment obligations. New obligations create new qualifications. And, people with new debt have higher debt-to-income ratios…higher ratios make for riskier loans…and sometimes qualified borrowers no longer qualify.

Tip 4: don’t co-sign for other loans for anyone

When you co-sign, you are obligated. As I said before, with that obligation comes higher ratios as well. Even if you swear you will not be the one making the payments, your lender will have to count the payments against you.

Tip 5: don’t change bank accounts

Remember, lenders need to source and track assets. That task is significantly easier when there is consistency among your accounts. Before you even transfer any money, talk to your loan officer.

Tip 6: don’t apply for new credit

It doesn’t matter whether it’s a new credit card or a new car. When you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO® score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.

Tip 7: don’t close any credit accounts

Many clients think that having less available credit makes them less risky and more likely to be approved. Wrong. A major component of your score is your length and depth of credit history, and not just your payment history, and your total usage of credit as a percentage of available credit.

Closing accounts has a negative impact on both of those determinants in your score.

Bottom line is any change in income or credit can change your qualifications for your home loan. Review any types of changes that you’re expecting with your loan officer so that you’re not jeopardizing your future home purchase.

I hope you found this helpful. Please subscribe for more helpful videos like this one, and I look forward to seeing you in the next video.

Best,

Michelle