5 Ways to Ruin your Mortgage Loan even after Being Pre-Approved
You did your homework. You paid all your bills on time, kept your debt low and made sure to increase your credit score above 620. After applying for a mortgage loan, you got pre-approved. Nice job! The sky is blue and all lights are green for you to begin shopping around for a home. But careful, that's the only big thing you should be shopping around at this point.
Being pre-approved doesn't mean that you have secured a mortgage loan. On the contrary, if you don't keep up with your credit score and other credit qualifications, your lender may deny the loan right before closing on the property. That's cruel, I know, but your actions before closing may bring surprising consequences such as delaying the loan, losing your locked interest rate or getting denied for the mortgage loan.
Here is how unconsciously you may end up ruining your chances of getting your loan approved, lose your possibility to buy your chosen home and how you can avoid it.
1. Change Jobs
Tired of your job and maybe considering the possibility of a new job offer? You may want to delay saying goodbye to your current employer until at very least you close on your new home purchase. Changing your job status, may bring some concerns on the lender about the security of your new job position. They usually require 2 years of continuous employment on the same field. Change this and you may end up missing your previous boss.
2. Making a Big Purchase
You go to the store and see the perfect furniture that goes along with the soon to be your new home. If you don't buy it now someone else might. You should take the risk by letting the opportunity of buying it on credit pass by.
Lenders will sometimes re-check your credit prior to loan closing. If they see a large purchase that exceeds the guideline standard maximums of loan-to-value or debt-to-income ratios they may denied your mortgage loan.
For that reason, do not buy furniture, cars, boats or anything else on credit that may affect your loan.
3. Missing Payments
As you probably know at this point, paying your bills on time is the number one factor of your credit score. Payments on time will increase your credit and on the same note missing payments will deteriorate your credit.
If you start missing payments your credit score will fall and depending on your level it may get you in trouble. You may lose the attractive interest rate that you had locked in or in the worst cases you may lose the opportunity of getting the loan altogether if the credit falls below a certain level.
Pay ALL your bills on time.
4. Opening New Lines of Credit or Closing Credit Cards
Good money-back offers arrive to your mail every day? Shred those application forms and delete those emails. Old credit card that you don't use any more? Avoid closing them at all cost.
Here applies the same concept that we've been talking about. Anything that negatively affects your credit score may delay your closing or get your loan application denied.
5. Making Large Deposits
Is there ever a time when having a big amount of cash deposited into your bank account may be a bad thing? Surprisingly yes. While you are on a contract to purchase a home your credit and funds are meticulously verified.
If all of the sudden you have a large sum of money deposited in your account your Lender may require sourcing that money which may delay your closing process. Documents for proof and explanation letter may be requested. So, let your family members know they should delay their generosity to after you are closed on the transaction.
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