It’s easy to find information about what to do when you are looking to finance a home. You can get tips from your friends, family, lender, and even online, but has anyone ever told you what not to do when financing your mortgage? Check out these four things to avoid while applying for a home loan.
You should avoid changing jobs until after you’ve closed your loan and finished the home financing process. If you switch your job before closing, the loan approval process could be affected, leading to a longer closing time and a reevaluation to see if you still qualify for the loan.
Opening A New Line Of Credit
Getting a new credit card or borrowing money and making your payments on time can help improve your credit score but opening a new line of credit just before or during your mortgage financing process can be detrimental. A new credit account tends to lower your credit score which could cause your loan terms to be reassessed.
Making A Large Purchase
This is not the time to buy yourself the diamond necklace you’ve always wanted. A major purchase on credit can have a negative impact on your debt-to-income ratio which is your total monthly debt payment divided by your gross monthly income. A higher debt-to-income ratio can ruin your chances of getting a home loan so avoid this mistake at all costs until your loan is closed.
Forgetting To Pay Bills
Continue to make your payments on any outstanding bills and don’t max out your existing credit cards during this time. You don’t want any significant changes to be made to your credit score which could influence the review process while you’re being evaluated for eligibility for your new loan.
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