If you’re planning on purchasing a home and you plan to utilize a mortgage to do so there are some things you should not do in advance.
- Don’t apply for new credit: applying for new credit can lower your credit score
- Don’t close any credit accounts or transfer your debt: although it may be a smart move financially, it will show a higher usage of debt compared to your limit on your available credit.
- Don’t move your money around without a proper paper trail: your lender is going to need your most recent bank statements prior to settling your loan. So if you have any unusual deposits, you will need to be able to provide complete documentation.
- Don’t increase your debts: debt to income ratio is very important for loan approval. Don’t take on more debt as you don’t want to go above the lender’s maximum debt to income ratio.
- Don’t skip a payment or make a late payment: this is a surefire way to negatively affect your credit history.
- Don’t buy a car: although you may easily be able to afford it, the further depletion of your savings or the addition of a new car loan can derail your mortgage application.
- Don’t change jobs if you can help it: your lender needs to verify employment and will need pay stubs to prove your income before your loan can be settled.
- Don’t spend your savings: you will need cash available at settlement for your down payment and closing costs. Your lender may even choose to verify your cash reserves one more time prior to closing the loan.
If you have additional questions don’t hesitate to reach out to me!
Torben Yjord-Jackson – Realtor
EXP Realty of CA, Inc.