Insights

When you apply for a mortgage loan, the lender will evaluate your information to determine whether you have the financial means of handling a mortgage payment for the long term. Much of this determination is based on your financial history.

Too often, potential home buyers think that once they have applied, changes in their financial profile will not impact their original application. They are surprised to find their loan approval or closing delayed due to a change they innocently made.

For a smooth and timely process, here are some changes you should avoid from the time you apply for a mortgage until after the closing of your loan:

• Switching jobs, becoming self-employed or quitting your job. Of course, there may be times when you can't avoid an employment change. In such cases, it is best to talk with your lender right away.
• Buying a big-ticket item, such as a car, truck, van or boat, which will impact your debt-to-income ratio.
• Making changes that will impact your credit worthiness. You may be excited to buy new furniture and home decor, but doing so with credit cards is not a good decision. Avoid using credit cards excessively or making late payments. And don't co-sign a loan for anyone.
• Opening new credit accounts. You should delay originating any inquiries on your credit.
• Changing bank accounts or making large deposits into your bank account. Such actions may be completely innocent, but they can lead to lender questions.
• Spending the money set aside for down payment or closing costs. Having less than what you need can impact your loan eligibility.

Even though we have focused on changes to avoid after you apply, also be sure to include ALL debts and liabilities in your original loan application. Omissions can delay your time to loan approval.

Finally, keep in mind that when mortgage lenders ask questions about changes in your financial profile, they are doing so in your best interest. Part of their job is to ensure you can afford your monthly loan payment, so you are not stressed by financial concerns and can enjoy your new home.

 

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