Applying for a home loan? If you’ve done all of the work to finally get approved you certainly don’t want to sabotage your loan now. However, there are things that borrowers have done that have completely ruined their chances of getting the home loan and even buying a home. That’s not something that you want to do. Once you are approved for a home loan and your rate is locked in, it’s like you need to freeze your spending. But, no matter how much advice you can give someone, there’s always those that make mistakes. As my father always said, you can’t make all the mistakes in the world you have to learn by other peoples. Here are 5 major mistakes and things not to do once your home loan is approved.
#1. Buy anything major.
Like I just said, once your home loan is approved freeze any major spending. Yes, you still need to be paying your bills and you can buy groceries, gas, and normal everyday things, but this is not the time to buy a new car or make huge purchases like buying new furniture for the home you think you’re going to get. Even if you take out a $1000 home loan or purchase something over $1000, that will trigger your lender to take a look at your finances. They expect you to have enough money in case of an emergency so by spending that money in your bank account, you now don’t have enough liquid funds to support that and that may ruin your chances of getting the best interest rate and even the home loan at all.
#2. Canceling credit cards.
You might think that canceling credit cards or eliminating any available balances is a good thing but not in the middle of your loan application. Lenders take a look at all of your available credit, which means that if you have four credit cards and three of them have a zero balance but one of them is maxed out, canceling those three with a zero balance means that now you have zero available credit. That does not look good to lenders. Even if you have credit cards and loans out there with a very low balance or zero balance, keep them until you close on your home loan. This will show that you are responsible with available credit and not maxing out everything you have.
#3. Losing your job or changing jobs altogether.
“This is similar to freezing your spending. Unless you’re getting a promotion within the same line of work or within the same company, try not to make any major changes to your employment status. Losing your job, quitting and reapplying for another job, or getting laid off all will affect your chances of getting a home loan. Try not to make any major employment status changes until your loan closes.” – Seattle Real Estate Agent
#4. Cease making payments.
This should be a no-brainer, but try to stay up with all of your monthly payments this includes medical bills, insurance payments, car payments, student loan debts, credit card payments, utility payments, or pretty much anything that you know you have to pay on a regular basis. Make sure they are paid on time throughout the duration of your application process.
#5. Getting a windfall.
“You might think this is a great event but any unusual spending or even any unusual deposits into bank accounts can look suspicious. While you may not be able to help some of them, if you can, wait to deposit any major gifts or investments until after the loan closes. If you can’t, be sure to have some verification or explanation to provide your underwriters and loan officers just in case.” – Buyers Agent Eastern Suburbs
Getting a home loan can be a little bit tricky and anxiety-inducing but if you stick to these five things and try not to make any major moves during the process, you should be clear to close.