Friday, October 30, 2020 / by Breanna Thornton
Applying for a mortgage is a big deal when it comes to buying your next home. There are a lot of factors that play into it. By avoiding the following six items, you will improve your chance of being approved for a loan and have a more secure buying experience.
Image from gtgfi.com
1) Don’t deposit cash into your bank account unless you speak with your banker first.
Large amounts of cash going into a bank account would concern a lender and possibly lead them to deny the mortgage. By avoiding a deposit of any "out-of-the-norm" amount of money, you won’t raise any red flags.
2) Don’t make any large purchases.
Typically, if you have to finance a large purchase (like a car or furniture), it could temporarily drop your credit score. This is something that will affect your ability to qualify for a loan.
3) Don’t co-sign other loans for anyone.
Co-signing a loan brings some potential risk. If the other party fails to make a payment, the charge could land on you. Any responsibility for debt will be reflected in your credit score.
4) Don’t change bank accounts.
A lender will want to check where your assets are from, and changing bank accounts can make this difficult. Staying consistent will also verify that you have the funds for different payments throughout the process of buying a home.
5) Don’t apply for new credit.
Opening new lines of credit could drop your credit score for a time, which decreases your likelihood of getting a loan. Additionally, this could put you at risk for higher interest rates.
6) Don’t close credit accounts.
Closing a credit account will mess up your credit history and lower your credit score. This could show a lender that you are not able to hold a line of credit, so you might not be trustworthy with a loan.
At the end of the day, as long as you stay in touch with your banker and real estate agent regarding finances, you will be totally fine. Buying a home is an exciting experience, so get connected and let us help you make the best choices! Have a happy and safe Halloween!
Header image from bostongreenrealty.com
Info from My Mortgage Insider, Credit.com, Rocketmortgage.com, Amerifirst.com, Lendingtree.com