Things to Avoid After Applying for a Mortgage
March 14, 2022
Looking for a home is an exhilarating yet stressful process. Many people think once they’ve applied for a mortgage—despite receiving pre approval—that they’ve already crossed the finish line. However, many things can change between submitting your application and obtaining final approval. If you want to make sure things go smoothly after applying for your mortgage, follow these tips about the things you should avoid after applying for your mortgage.
What Should You Not Do While Waiting for a Mortgage Approval?
You may be surprised to learn that you have to be careful with your accounts and finances after you apply for a mortgage. A mortgage approval process is complicated, and plenty of things can ruin your chances of getting approved. As real estate agents in Chester County, PA, we’ve seen many clients go through the mortgage approval process, and we have the experience to know what applicants need to stay away from. Keep the following tips in mind after you’ve applied for a mortgage.
Don’t Change Your Income
Having a steady income is crucial for getting a mortgage. While it isn’t entirely in your control, you should not change your job when you’re in the middle of the loan approval process. Career changes typically result in a change in income which could mean you may not be approved to borrow the same amount of money you applied for.
If you happen to receive a change in your income during the process, consult your loan officer for advice.
Don’t Make Any Large Purchases
As someone getting ready to become a homeowner, you’re likely tempted to start making furniture or appliance purchases. However, you shouldn’t jump the gun. If you’ve applied for a mortgage, you need to stay away from significantly large purchases as they will affect your credit score.
Most experts recommend aiming for a utilization ratio of under 30% to keep your credit score high. Holding off on big purchases will help keep your ratio low enough to ensure your mortgage is approved.
Don’t Apply for Other New Credit
If you apply for a new credit line—or even cosign on a loan—your credit score could be negatively affected. Your loan officer can check your credit part during the application process. When you open a new line of credit with a new financial channel, your credit score can often experience a dip.
Opening a new line of credit after applying for a mortgage can affect your mortgage qualification or increase the interest rate you receive.
Don’t Deposit Cash in Your Account
A large cash deposit will worry a loan underwriter as it may indicate that you’ve borrowed money and therefore increased your debt-to-ratio income. After applying for a mortgage, stay away from making any deposits into your account that doesn’t have a clear paper trail. Your paycheck or any other reported income is acceptable.
Transfers between your account are okay as a loan officer can see where the money came from. However, avoid depositing sums over $1,000 to ensure you don’t affect your approval.
Don’t Close a Credit Account
Your credit history plays a crucial role in determining your ability to pay back a loan in the eyes of a loan officer. If you close a credit account, you end that credit history and reduce the amount of overall credit history you hold. If you close a credit card, you lower the amount of credit you have available, thereby increasing your credit utilization ratio.
After applying for a mortgage, you should not close any of your accounts to ensure you maintain your history and credit utilization ratio.
If You Need, Get Help From The Experts
Applying for a mortgage is just the beginning of the home-buying process. There are still many things you need to do to make sure everything goes smoothly and that you end up with the home of your dreams. To help make this process as stress-free as possible, follow these tips from Anne Townes Real Estate experts about what you should avoid after applying for your mortgage. And if you have any questions or concerns, don’t hesitate to contact us today. We’re here to help!