Although it may seem like the obvious thing to keep paying bills and show your responsibility after you are preapproved for a mortgage, surprisingly there are some people who get so excited about shopping for a home that they neglect some other important things. Mortgage preapprovals are normally good for 60 – 120 days depending on the lender so after that specific time period, if you have not taken possession of a home, the lender will do another credit check so it’s important to stay on top of your good behavior that got you the preapproval in the first place. Here are some tips on how to be sure you will remain approved.
1) Don’t apply for new credit
Some mortgage brokers are required to do another credit check before the final approval. If you have new credit inquires, they may have to verify you haven’t taken on any new debt and this can take time. Also, your credit score can change with new debt so don’t take any chances.
2) Don’t make any major purchases
If your mortgage broker does has to pull another credit report, and we find a new loan or change in credit card balance (say your bought new furniture or appliances on your credit card, we will have to use those credit card balances which will increase the debt-servicing (the guidelines used for qualifying) and it could bring down your maximum loan amount and make you miss out on the house you have made an offer on.
3) Don’t pay off all your debt
Everything you do can have an impact on your approval so consult your mortgage broker before doing anything. Paying off your credit card debt may seem like a good idea but if it diminishes your cash flow and your ability to provide a down payment, you will end up having to wait to purchase in order to save up again.
4) Don’t co-sign any loans
A lot of people don’t realize that co-signing a loan does affect your credit even if you have nothing to do with that loan from the time you sign. Any loans that show up on your credit report have to be used in our calculations so even though you never make a payment on that new car you consigned for your brother, according to the lenders, you have that monthly obligation because if he doesn’t make the payments, you are responsible for them.
5) Don’t change jobs
Even if it seems like a good move, don’t make the switch while you are still in the process of buying a house. Most of the time when a person starts a new job, they are on probation, meaning you could be let go at any time. That does not give lenders security. Not to say there are not exceptions but to give yourself more security, hold off on switching jobs until you buy your home.
6) Don’t ignore lender requests
If your mortgage broker recommends something, you should really take their advice. We know what we’re talking about. If we tell you not to buy a new car before you get your house, it’s not because we want you to continue to drive that old beat up pickup truck around, it’s because a big car payment is one of the biggest reasons people don’t get approved for a mortgage. Also, when we request certain documents, I promise it’s not to make your life miserable or to see how good you are at filing your paperwork. These documents are required by our lenders to verify the information we have provided. Without verification, they will not fund your mortgage and you will not get into your home.
7) Stay current on your existing accounts
Continue to pay your bills on time and don’t be in your overdraft on any of your accounts. The credit report we pull is a snap shot in time and if you want to keep your chances of being approved again in the future, you want to try to keep your finances consistent.
8) Keep a paper trail of your deposits
Depositing money isn’t a problem, but it’s a good idea to keep track of any large deposits (other than regular paychecks). There is a lot more mortgage fraud and money laundering now than there used to be so lenders are much more restrictive and they want to know where those large deposits come from.
Please contact me if you have any questions about this, or any other financing issues. It’s important to get things right!
Naomi Hamm, Mortgage Broker & Partner
Office: (204) 727-2177
Cell: (204) 724-7290
Source: MSN real estate