If you are a buyer looking for a home, or if you plan to do so soon, there are a few things you need to be aware of that could hurt your chances of becoming approved. Although I am not a mortgage professional, because I work closely with them on a daily basis I felt it important to share some tips with those who are planning a future purchase and need to secure a loan. Many lenders pull credit and also ask for account statements again right before closing, so be careful.
Here are the most important things to avoid in order to secure a loan:
- Do not quit your job, change industries or start a new company (this alters your tax status and you will not be able to provide 2 years of steady employment history, as the clock starts ticking all over – I personally had this happen and had to wait 2 years to refinance)
- Do not cosign on a loan with anyone (you will be 100% responsible for it if the other person defaults)
- Do not switch from a salaried job to one with a commission.
- Do not transfer large sums of money between bank accounts.
- Do not forget to pay your bills, even if there are some in dispute
- Do not open new credit card accounts, even if it will save you money
- Do not accept a cash gift without filing the proper “gift” paperwork
- Do not make random, undocumented deposits into your bank accounts
- Do not purchase a new car or trade up to a pricier lease (in fact, it is advisable not to trade any lease until your loan has closed, even if it lowers your payments)
- Do not purchase any big ticket items like furniture or window treatments – you need to be patient and wait until you have closed escrow
The best advice when applying for a home loan is to avoid spending on anything that is unnecessary before and while the loan is being processed. Plan to eat at home and be frugal for the short period. Most importantly, speak with a mortgage professional, get preapproved and make a plan so you can work closely with your real estate agent to stay within your boundaries. It will be well worth it in the end!
Lynn Kronk – Realtor