Before You Buy a Home – Do Not Do These Five Things

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Are you getting ready to purchase a home? There are five things you should not do prior to closing on your mortgage loan:

Do not go on spending sprees
Keep your credit in check. Do not buy a new car or furniture until after your loan closes. Avoid obtaining any new credit. You do not want to add to your debt at this time. (Any new payments will add to your debt-to-payment ratio which will affect obtaining a mortgage loan.)

When you take on new debt it changes the debt-to-income ratio. The lender may be concerned you have too much money going out and not enough coming in. If you buy a large item (such as furniture), a credit inquiry triggered when you buy that item can result in a negative response from your lender (even after you are approved.) This is because new credit creates a “FICO triple hit” on your credit: new account, an account with little or no repayment history and a high balance-t0-credit limit ratio.

Do not make unusual deposits or withdrawals
Any unusual deposits or withdrawals will need to be explained with documentation and a paper trail. If someone is giving you a gift for a down payment or closing costs, it will need to be documented.

Do not be late on paying your bills and don’t close accounts
You do not want to have a late payment on your credit report. (Payment history accounts for a large portion of your credit score.)

Also, do not close any accounts. If you don’t have existing credit accounts that show your good money habits of timely payment, it may look like you have less available credit.

Do not co-sign a loan
When you co-sign a loan, you take on a possible financial responsibility and that can affect your debt-to-income ratio which could affect your ability to obtain your mortgage loan.

Do not change employment
Lenders want to see stable, reliable employment. If you get a promotion or change to a job with a higher salary, you will need to present your proof of employment again and this could delay your closing.

Remember, pre-approval for a mortgage loan is not a guarantee of obtaining that loan. Be sure to communicate with your Sibcy Cline mortgage loan consultant throughout the entire mortgage process.

Need help with your home mortgage? Contact Sibcy Cline Mortgage Services.

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