Most borrowers
want their mortgage closing to be simple and stress-free. That is why it is
important to avoid the behaviors that can have an adverse effect on the
mortgage application process, and to do the things that keep your financial
picture frozen in a stable position until the loan closes.
Follow the
basic steps below and you should have a worry-free experience when going
through the mortgage process:
Do:
- Continue making your mortgage or rent payments: Late payments on existing mortgages, car loans, or student loans are reported to the Credit Reporting Agency (CRA). A thirty day late payment can cost a potential homeowner several points on their credit score.
- Stay current on all your existing accounts: You can still use credit cards during the home buying process, but it is important to keep them in good standing. Any deviations from normal spending patterns can seem suspicious.
- Keep working at your current employer: It is important to keep your income and employment information consistent during the mortgage application process.
- Keep your same insurance agency: Keeping your insurance agency the same is an essential step to making a smooth mortgage application process.
- Continue living at your current residence: Keep your contact information the same. Changes in residence can show instability, which can negatively affect the mortgage closing process.
- Call your loan officer if you have any questions: If you have questions during the loan process, feel free to call me directly at 410.491.0200 or email at sepstein@baybankmd.com.
Don’t:
- Quit your job: Don’t make changes with your employment or income.
- Change bank accounts: Don’t make changes to your financial accounts.
- Open a new cell phone account: Don’t make changes to your contact information. Also, some cell phones plans rely on credit scores.
- Make unusually large deposits into your checking or savings accounts: Deposit amounts that are out of the ordinary will raise questions from the underwriter unless the deposit is a documented gift. Similarly, don’t make large transfers from one account to another.
- Make changes to the purchase contract: Don’t make changes to the purchase contract without first consulting your lender.
- Make large purchases (car, jewelry, boat, etc.): This can also include starting large home improvement projects, furniture, joining a fitness club, or financing any elective medical procedures.
- Apply for a new credit of any kind: It is important to not establish any new lines of credit during the loan application process, whether it is a credit card or a new loan.
- Finance furniture purchases: Furnishing a new house can be exciting. However, some furniture retailers offer credit extensions for purchases. This can also affect your credit score.
- Pay off charge offs or collections without speaking to your mortgage lender: Paying off old collections can cause a drop in credit score. Your mortgage loan officer will tell you to make a payment if it is necessary to secure the loan.
- Pay off loans or credit cards: Don’t pay off any loans, credit cards, or outstanding debt without first speaking to your mortgage lender.
- Close credit card accounts: Closing any credit card accounts can affect the debt to available credit limit ratio. Wait until after the mortgage has closed to cancel any credit card accounts.
- Max out or over charge credit card accounts: Once potential homeowners are engaged in the mortgage process, it is important to keep credit cards below 30% of the available limit.
- Consolidate debt: Consolidating debt can change the debt-credit ratio to where it becomes over 30% of the available limit.
For more
information, please contact Stuart Epstein at 410.491.0200 or email at sepstein@baybankmd.com.
