If you are applying for a mortgage or plan
to in the near future, you need to be careful with your funds. You know that
having a steady income and good credit are important to being approved, but
other factors could result in a denial.
Lending Money
If you have a family member come to you for
a temporary loan, you could get turned down for a mortgage if you say yes. That
may not seem fair, but you may be required to keep a certain amount of money in
reserve for your application to be approved.
Your lender will ask what money you have in
savings and checking accounts. That money may be used to calculate your down
payment or reserve money for future payments. If it disappears or is reduced
because you loaned to a friend or family member, you may no longer qualify.
The same holds true if you use the money to
buy something. Most lenders recommend waiting to make large purchases until
after you close on a home.
Changing Jobs
Getting a different job in the middle of a home purchase is also not a good
idea. If you have received a salary increase, it may not lead to a denial, but
it could still cause a delay. However, if you take a pay cut or even switch
fields, your loan application could be denied if you are seen as an increased
risk. You will need to show 30 days of income with your new job prior to
closing. In addition, if part of your salary is based on commission, it won’t
count with a new job.
Closing an Account
Don’t close out any accounts during your
loan process. Even if you don’t use them, they can make big changes in your
credit portfolio that could change your approval. Each open account impacts
your total credit available and length of credit history. This can change your
credit score and lower it to below the required number. Even paying off a balance
is not a good idea without talking to your lender first.
Avoid doing anything to change your
finances, income or credit until after you have closed on your home. It will
make the process go much smoother and prevent your approval from being turned
into a denial.
If you are ready to buy a house, contact me to help you
find the right place.
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