If you are thinking about applying for a mortgage, you want to make sure your finances are in order. You will be required to submit your financial information to your lender, so it’s important to not make missteps in the weeks and months before completing a mortgage application.
Following are several things you should try to avoid if you plan on applying for a mortgage at any point in the near future:
Avoid using credit cards for large purchases. Your mortgage lender will take a careful look at your debt-to-income ratio (commonly referred to as DTI). Adding to your total debt by making large purchases with a credit card may skew your ratio and actually disqualify you for the best possible mortgage interest rate. Therefore, if you want to purchase something expensive with a credit card, see if you can put it off until after your mortgage closes.
Wait to purchase a new car. Just as credit card debt can alter your debt-to-income ratio, a car loan can do the same thing. If you can, it’s a good idea to wait until after your loan closes to purchase a car.
Quit your job. When you apply for a mortgage, the lender will want to verify your employment and your income. If you quit your job prior to applying for a mortgage – or if you quit before the loan closes – you run the risk of either not qualifying for the loan or losing the loan altogether.
Make large deposits or withdrawals from your bank account. If you make large deposits to your bank account, or take out a lot of cash all at once, your lender will want to know why. Your mortgage lender will require that you submit recent bank statements for all of your accounts, and the lender may scrutinize large deposits or withdrawals.
Do anything that will negatively impact your credit score. Your lender will rely on your credit report and your credit score to determine if you qualify for a mortgage. The numbers will also dictate the mortgage interest rate you are offered. If your credit report suddenly shows negative activity (such as unpaid monthly payments on accounts), your loan may be put in jeopardy.
Use a mortgage broker who doesn’t seem knowledgeable or responsive. One of the keys to success with a mortgage is working with a mortgage broker who is experienced and organized. If you have a negative feeling about the mortgage broker you originally selected, you have the right to stop working with that person and find someone more suitable.
For more mortgage tips and advice, call The Home Loan Arranger today at 1-877-938-7501. A free consultation is just a phone call away!