Are you considering purchasing a home in Maryland in the near future? Then it’s time to brush up on your mortgage knowledge. Learn about the best practices you can take after applying for a mortgage and how you can increase your chances of getting approved. Aside from consulting with your loan officer, avoid these things to ensure that the entire process will be easy and as smooth as possible.
Don’t change your income
Your loan officer must track the amount as well as the source of your annual income. If possible, avoid becoming self-employed or changing from salary to commission during this time.
Avoid applying for new credit
It doesn’t matter whether it’s a new car or a new credit card. Your FICO score will be affected when organizations in multiple financial channels such as auto, mortgage, or credit card companies run your credit report. Low credit scores can affect your interest rate and even your eligibility for approval.
Refrain from depositing cash into your bank accounts
Lenders are interested in sourcing your money, and cash is not very traceable. Before making any deposits in your accounts, consult with your loan officer on the proper documentation of your transactions.
Avoid co-signing other loans for anyone
You become responsible when you co-sign, and this also creates a higher debt to income ratio. Even if you will not be making the payments, the lender will still count the new debt against you.
Refrain from making large purchases such as new furniture or a car
Adding new monthly bills brings along new debt and individuals with new debt will have a higher debt-to-income ratio. In the eyes of the lender this makes for riskier loans and in some cases, qualified borrowers will no longer qualify.
Avoid changing bank accounts
Always keep in mind that lenders need to source and track your assets. This is much easier with consistency among your accounts. Consult with your loan officer even before transferring money between accounts.
Never close any credit accounts
Many Maryland borrowers have the misconception that having less available credit reduces their risks, and if they close some accounts, they are more likely to be approved. This is wrong! A significant factor of your FICO score is the length and depth of your credit history, not just your payment history.
Any changes in assets, credit, or income should be reviewed and handled in a way that ensures you’ll be approved for your home loan. The best way is to be transparent and discuss any plans with your Maryland loan officer before making any large financial decisions. These experts are skilled in guiding you through the process and increasing your home loan approval chances.