Getting a new mortgage seems simple enough – qualify for the payment and have the money for the down payment, right? Once you are qualified and have written a purchase agreement, there are some things you do not want to do!
Do not make big purchases. Adding on new debt can be a problem, even if you have the money to pay for the item. Lenders will pull a credit refresh (similar to a new report, but without scores), they are looking for new debt, higher debt on revolving accounts and new inquiries. If you have taken out new debt, you will need to qualify for the new payments. With the holiday season just ending, we are seeing several files that have new credit card debt. That works as long as you can qualify with the new payments. The last thing you want to do is have new debt that all the sudden affects your new purchase (or a refinance).
Don't open new accounts. This can also affect your mortgage approval. You will need to explain the inquiries and let us know if you have any new debt.
Don't close lines of credit unless your lender tells you to. This may seem strange, but it can affect your available credit and if you do need to have your credit report updated (more than just a credit refresh), it may lower your credit score. If you close a line of credit, that available credit is gone and it affects your credit utilization.
Do not switch jobs. Income stability is huge and we need to verify two years of employment. You will typically need a paystub with 30 days of earnings on it. If you switch jobs, it may delay your closing. If you switch job and your employment goes from a regular w2 income to self employment or commission income, you may go from an approval to a denial – it's best to wait until you have closed on your new home.
Don't deposit large amounts into your bank account – unless you can document the deposit. If you are getting a gift, let your loan officer know so you can get the proper documentation. If you are gettin money from another source, talk to your loan officer and find out what you need to do for documentation. Cash deposits usually can't be used, so make sure your lender is aware of any deposits.
If you have questions on something you think might affect your mortgage approval, ask your lender first. It's much better to be safe and know that you are not going to have any surprises on your mortgage loan! Because there is last minute verifications of income and credit, you need to let your loan officer know if there could be problems.
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc, An Equal Housing Lender, NMLS#150953 - Email - Website
