You’ve found your dream home and have applied for the mortgage, don’t let up on the gas just yet. There are a few things to keep in mind while waiting for the loan to close. After applying for your home loan, you need to avoid doing the following:
- Although it’s exciting making plans to decorate your new home, avoid making large purchases on credit. Lenders have pre-approved you based on your debt-to-income ratio at the time of application; however, they will pull another credit report and if your debt-to-income ratio has changed you could be disqualified. Large purchases include furniture, appliances, cars, boats, you get the idea.
- Don’t get any new credit. In addition to avoiding large purchases, avoid getting new credit cards even if you are opting for a card with lower interest rates. It’s never a good idea to open new credit.
- Most financial experts, advise against co-signing on loans anytime, but it is particularly important to avoid when applying for a home loan. Although you may be able to prove that you aren’t the one making the payments, you are still liable if the payments aren’t being made. Co-signing also increases your debt-to-income ratio.
- Having less available credit seems like it would be best for your credit score; however, it can have the opposite effect. A major component of your credit score is your length and depth of credit history, not just your payment history. Closing accounts has a negative impact on your credit score.
- When in doubt, always call your lender first. No need to put unnecessary stress on yourself; you want your home purchase to go as smoothly as possible.
If you need help finding your dream home, contact Stutesman’s Action Realty, 833.286.8400.