Keeping your Mortgage Pre-Approval
Congratulations! Your mortgage has been approved. You’ve picked out your home and the seller has accepted your offer. Everything’s all set, right?
Not so fast.
Even though you’ve been approved, you still need to keep your financial situation in order. It is not uncommon for lenders to pull a borrower’s credit rating and history a final time before closing on a home. Stay focused on all of the factors that were important for pre-approval. Here are a few critical pieces of advice to avoid any issues at closing.
Don’t make major purchases: Once you’ve submitted your documentation to your loan officer, your financial situation shouldn’t change from pre-approval to loan finalization. You don’t want to change your financial situation because that could ultimately result in loan rejection, even if you were initially pre-approved. To avoid rejection, don’t make any major purchases that change your debt service ratios.
Don’t Miss Payments: You’ve likely spent a lot of time making sure that your credit rating is good and that you haven’t missed any payments leading up to your pre-approval.
If the lender chooses to pull your credit again before the paperwork is signed and finds that you have missed or late payments, they could change their minds and deny your loan.
Don’t apply for new credit: You also shouldn’t apply for new forms of credit like a line of credit or credit card and don’t co-sign a loan for a friend or family member. Otherwise, you may no longer qualify for a mortgage.
Stop Moving Money Around: Large cash transactions—including deposits, withdrawals, or transfers raise red flags for lenders. It may appear that you have other debts that they didn’t see when they pulled your credit. These big transactions make you look like a risky borrower. Try to organize your finances so that you don’t need to perform these types of cash transactions until everything has been approved.
Don’t quit or change jobs: Finally, don’t change jobs! A key to your mortgage approval is a steady and predictable income. Changing jobs or quitting your job to become self-employed will definitely throw a wrench into your mortgage approval process. Instead, put off changing employers or becoming an entrepreneur until after you have the keys to your new place.
These are some of the basics that one has to keep in mind when after their mortgage pre-approved. For a more detailed outlook, an experienced mortgage broker is the way to go. To get connected to the best mortgage brokers, agents and lawyers, log on to Agent ReVa.