The stresses of juggling everything going on while buying a home can add up quickly.
All the steps, including looking at listings, building your budget, and then getting pre-approved for a mortgage, are enough to get most people worked up and frustrated (because looking for a new home should involve touring lots of fabulous open houses and deciding which place you should buy, right?
The period of time after applying for a mortgage and closing the loan should involve consistency. That’s what lenders expect. And they don’t like surprises.
Here are 5 things you should never do after applying for a mortgage for a house in Boston.
DON’T CHANGE JOBS
Once you have applied for a mortgage, your lender of choice will begin the process of determining if they believe you qualify for a loan through them, how much they are willing to lend you, and at what interest rate the loan will be offered to you.
The lender primarily factors in your income and credit history to make all of these determinations. It’s very important that you do everything you can to keep things status quo during this process to make sure the lender trusts you will be a responsible client.
If you change your job, this may mean an adjustment in your income and can have an impact on the level of risk the lender believes you carry and can impact your chances when applying for a mortgage.
Years ago, one of our clients was going through a refinance on their primary home. During the process – which was taking quite a long time with the lender he selected – he left his job for a better opportunity on all levels (career-wise, title, and compensation). They lender freaked out…a little. But after confirming that our client was not switching industries and after confirming the higher salary, everything continued forward.
DON’T PURCHASE BIG-TICKET ITEMS
If you’re in the market for other big-ticket items (a new car, a new boat, financnig a home improvement project, among others) at the time you’re also looking to purchase a home, it may be time to make a choice between one or the other.
With your main goal to keep your credit history as-is throughout the homebuying process, making any large purchases could bring a big problem into the equation when applying for a mortgage. This includes any large purchases that could be made in cash but also paying using a credit card. Pay in cash when you can – you’ll want to keep your credit utilization consistent throughout your application period.
DON’T RUN UP YOUR CREDIT CARDS
Make sure you’re as close to debt-free on your credit cards as possible by keeping your credit card balances low.
It isn’t a big issue to have some credit card debt, but if you’re floating a large monthly balance across all of your credit cards, that’s going to be a red flag for many mortgage lenders. By keeping large purchases out of the picture and sticking to your budget, you’ll be doing yourself a big favor in securing a decent interest rate when applying for a mortgage.
DON’T APPLY FOR NEW CREDIT OR CLOSE EXISTING ACCOUNTS
An important step that can be overlooked by some is to not open or close any existing lines of credit at your disposal.
When your lender is looking through your credit history, they want to see a long-term habit of responsibly managing your available finances. This tells them they can trust you with their money now in order for them to recoup the cost of the loan later.
Some people might think it’s okay to let an existing credit account close because they have it paid off and that makes them look responsible. This seems counter-intuitive, but here is why you shouldn’t close any unutilized or underutilized credit accounts – you would then have less credit immediately available to you, and the outstanding balance on the cards that you will keep open will actually increase your credit utilization percentage.
DON’T CO-SIGN OR TAKE OUT OTHER LOANS
Finally, do not take out or co-sign on any other loans after applying for a mortgage.
You may think it’s OK to co-sign because, ultimately, someone else is paying for the loan.
Keep in mind that co-signing a loan still makes you a liable party if that original person fails to pay on time.
Lenders want to see consistency in your credit history and tacking on an additional possible point of risk with another loan could send them running for the hills.
Professional Assistance Applying for a Mortgage in Boston
The biggest thing to remember regarding your credit during the home buying process is to keep it steady – no big changes, if at all possible.
Make that happen and you’ll be on your way to settling down in your new abode in no time.
If you need help applying for a mortgage in Boston, contact us today at (617) 657-9811!
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