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Even if you’re pre-approved for a mortgage you still have some time to go before you can get your cash in hand. Everything that you do before you close on a mortgage could have an effect on you. There are 10 things that you should not do before you close on your mortgage.
1. Don’t load up on purchases
One of the key factors in determining your eligibility is looking at your debt-to-income (DTI) ratio. The more debts that you have to pay, the higher your DTI, something that isn’t attractive to lenders. Instead, try and focus on the debts you have and pay them off first. The last thing you want to do is take out a car note or a not on something for thousands of dollars.
2. Don’t quit your 9 to 5
Sometimes stress at work can make you think about hitting the road and looking for another job. Though that’s okay, you might want to wait until after you close. Lenders look at the time you’ve been at your job and use that as a way to calculate your ability to pay back your loan. Plus, they don’t like to lend money to applicants who switch jobs, as it makes them look risky.
3. Don’t sign up for new credit cards
Even if it’s your favorite store, you shouldn’t open any new lines of credit before closing on a home. This will help keep your DTI lower too.
4. Don’t pay your bills late
Another key factor in determining your eligibility for a loan is your payment history. If lenders see that you’re always late, they could decide not to approve you or give you a higher rate overall.
5. Don’t ignore your lender
During the process of closing on a home, your lender will ask you a ton of questions. Plus, they may call you back to ask you some more if they need to. Be open and answer them when they call.
6. Don’t allow credit checks
If you apply for any loan, credit card, or even shop around for rates, lenders may run credit checks. Though not all credit checks are bad, you should keep them at a minimum as they drive down your credit score. Say “no” to credit checks and keep your credit score high.
7. Don’t cosign
Though it’s good to help others, you might want to avoid that before closing on a house. Not only does it add to your DTI ratio but it should lenders that you could be responsible for payment if the person you cosigned for fails to pay.
8. Don’t make large deposits
Apart from your paycheck, don’t make large deposits into your account. Lenders will want you to justify them and could use that as your overall income. Be as truthful as you can so that you get a fair rate and payment that you can afford.
9. Don’t change bank accounts
Your time with a bank says a lot about you and your responsibility. That’s why lenders want to see a bit of history, the longer the better. Before you close on a house, don’t close out a bank account or switch your money over.
10. Don’t use payday loans
Payday loans are there for emergencies and should be a last resort option. Not only do they look bad when you’re trying to buy a house but most of them can come with really high-interest rates. When closing on a home, lenders want to know that you have enough to pay for your monthly payment and have some room in case something comes up.
Make Sure You Look Good on Paper
When applying for a home loan, lenders want to know that you are a solid applicant. They want to see that you look good on paper and will check your credit score, DTI, and many other numbers, along with the amount of income and debts you already have. Avoiding these 10 things before closing on a home will guarantee that you have what lenders are looking for and won’t get hit with a high rate or terms that are way out of your league.