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Date Archives: November 22nd, 2022

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November
22

You did it—you worked hard and you're finally ready to apply for a home loan. The dream of homeownership is within your reach. While it's exciting to start planning the next chapter of your life, some actions could give the underwriter the impression that you may be too risky for loan approval.

To avoid jeopardizing your loan status, here are six things you should never do after applying for a home loan.  

Don't apply for new credit

Your credit can be pulled at any time throughout the application process, and any major change could affect your FICO® score. Inadvertently lowering your score and/or changing your debt-to-income ratio could hurt your chances of getting the loan that you want.  

Don't miss any payments

Keep paying your bills on time—especially other credit and loan payments. Payment history is a huge factor in your credit score, and late payments can do a lot of damage. Keeping up with your payments is good advice at any time, but it's especially important when you're waiting on loan approval.  

Don't make major purchases

It might be tempting to run out and start shopping for new furniture—but if you're waiting on loan approval, put that wallet away. Charging substantial purchases will increase your debt-to-income ratio and credit utilization. Any major purchase, even unrelated to your home (like a car), can impact your credit score and affect your loan status.   

Don't make large unexplained bank deposits

Part of the loan officer's job is to source your money, so if you make a big deposit (typically over $1,000) that isn't your usual paycheck, it's going to send up a red flag. We aren't saying you need to stash that money under your mattress until your loan is approved, but always talk to your loan officer about how to properly document your transactions.

Don't change jobs

We realize that this one might be out of your hands in some cases, but if you can help it, don't switch careers (or employers) while you're waiting for loan approval. Lenders are looking for consistent income, so changing jobs in the middle of the loan process could result in revisions to the amount you're approved to borrow. 

Don't close out any credit accounts

This might feel counterintuitive—wouldn't having LESS debt be better? Not in this case. Closing accounts will set off a chain reaction that reduces your available credit and raises your debt-to-income ratio. It can also affect your credit score by changing the landscape of your credit history. Both of these things can put your loan approval at risk.

The Bottom Line

ANY change in credit, income, and assets should be handled in a way that won't jeopardize your home loan approval. The best thing that you can do is be transparent and discuss any significant financial changes with your loan officer. They have the skills and knowledge to help guide you through the entire process, even if there are a few bumps along the way.

The Masiello Group is a second-generation family company that has been a trailblazer in New England real estate since 1966. With now more than 35 offices throughout northern New England, we're the largest residential real estate firm north of Boston to offer a complete suite of home services, including buying, selling, mortgage, title, insurance, relocation, and more. 

Our agents are eager and excited to meet your real estate needs! 

You can find more information on today's market and other real estate trends by reading our blog weekly at https://www.masiello.com/news-and-updates/

  

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