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Thinking of securing a mortgage? Common mistakes to avoid.

Thinking of Securing a Mortgage Common Mistakes to Avoid

Before you close on your mortgage, it's easy to get carried away with thinking about the possibilities of moving in and decorating. But there are some essential points that need to be taken into consideration first. You may not even know what needs to be avoided after applying for a home loan - so here is an exhaustive list of things you should steer clear from!

Avoid Placing Large Amounts of Cash in Your Bank Account

It is essential for lenders to know where your money comes from, and cash may be difficult to trace. Before placing any amount of hard currency into your accounts, make sure you have a conversation with your loan officer about the right protocol in documenting all transactions.

Avoid Making Huge Purchases

Don't be fooled - any big purchases can prevent you from obtaining the loan that you desire. When lenders review your credit report, they will see how much debt is related to your monthly income and decide on whether or not it's a safe investment for them. Remember this; if there's an increase in new debt, then chances are high that the lender won't approve of the loan because of its higher risk level. Keep away from buying anything extravagant such as furniture pieces or appliances until after you've been approved for the mortgage!

Avoid Cosigning a Loan for Anyone

By cosigning for a loan, you place yourself responsible for that loan's repayment and success. With such commitment comes higher debt-to-income ratios too. You may swear to your lender that none of the payments will be made by you, but they must still account them against your name nonetheless!

Don't Make the Mistake of Switching Bank Accounts!

Before you move any funds, chat with your loan officer; this way, lenders can quickly and easily locate and track all of your assets. Keeping a level consistency among the accounts will ensure that they have everything they need to make an accurate decision.

Avoid Applying for New Credit

When you are looking to acquire a new credit card, auto loan or mortgage, it is essential that your FICO® score remains in good standing. This number can determine the interest rate associated with this type of financial agreement and even if you qualify for approval. Anytime an organization runs a check on your credit report from multiple channels (mortgage, car loans etc.), it will affect your overall credit score - whether positive or negative!

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Refrain from Closing Any Accounts

Numerous buyers may assume that possessing less accessible credit makes them more probable to be accepted and pose a lesser risk. However, this is not correct. A considerable portion of your score consists of the length of your history with credits as well as how much you have utilized out of all available credits; both are affected by shutting down accounts. Hence, it can really hurt your rating if done incorrectly!

Make Sure to Proactively Converse with Your Lender About Any Updates

When discussing your mortgage with your lender, be transparent about any potential changes to income, assets or credit. Be sure that whatever decisions you make will not impact the status of your loan application. If there have been modifications in employment recently, articulate what they are and discuss them with the loan officer before taking on new financial obligations. Open communication is key when it comes to securing a home loan!

Final Thoughts

Prior to taking any major steps related to your finances, moving money around or making life-altering decisions, it is wise to consult a lender who can guide you on how these changes might affect your home loan. To ensure that the process of purchasing your new home goes as smooth and stress-free as possible, be sure not to overlook this important step!