Understanding Financing Terms

Recently Applied for a Mortgage? Don’t Do These Three Things

Have you finally found a home, had an offer accepted, and applied for your mortgage? If so, you don't want to do anything that could cause your mortgage to fall through and prevent you from buying the home. Make sure that you don't do any of these 3 things so that the mortgage approval goes smoothly. 

Don't Make Big Purchases

It's very important that you do not make any changes to your spending behavior while the mortgage approval process is happening. This means that you can continue using your credit cards as usual without any worry about it affecting your mortgage. For example, if you normally charge $1,000 to your credit card each month and pay it off in full, then you can continue doing so.

What you need to avoid is unusual spending behavior that is going to raise a red flag on your mortgage approval. This is often the case when people start making big purchases in anticipation of moving into their new home. They may buy a bunch of new furniture, buy home improvement tools and materials that they need, or even open up new lines of credit in preparation for those purchases. Those actions are going to show up on your credit report and potentially make you seem like a risky borrower. Wait to make those purchases after you close on the home and have the keys in your hand. 

Don't Co-sign For Another Loan

Has your home purchase inspired another friend or family member to do the same, except they are asking you to be the co-signer on their loans due to their bad credit? Know that this is going to cause a big problem on your credit report. Even though you are not the person taking out the loan, you are ultimately responsible for it. Their loan is going to show up on your credit report, which is not going to look good to the lender that is approving the mortgage for the home you want to buy. 

Don't Make Extra Deposits 

Have cash on hand that you need to deposit into your savings account? It's best to avoid making those large deposits and wait until you've closed on the home. A large deposit can look like a sudden windfall of money, and the lender is going to want to know where that money has come from. Even if it has been under your mattress until then, the sudden income is going to raise questions that need to be answered.    

If you are looking to get a mortgage or home loan, make sure to speak with a company like Dominion Capital Mortgage for more helpful tips.