Don’t Accidentally Curse Your Credit

Don’t Accidentally Curse Your Credit
Dave Brough:
If you’re planning to purchase a home with financing soon, then it’s important that you understand what you can and can’t do with your finances—if you want to qualify for a solid mortgage as quickly and as smoothly as possible, anyway. Here are six things to avoid directly prior to and during the loan approval process:

1. Don’t Deposit Any Cash Into Your Bank Accounts Without First Talking to Your Lender

Cash is really hard to track. If you’re getting a loan, your lender will have to examine your finances, and they must be able to source all the money coming into and out of your accounts.

2. Do NOT Apply For Any Other Type of Loan (e.g., Car or Furniture)

During the financing process, your lender assesses what’s known as your debt-to-income ratio—a fairly self-explanatory term. Applying for other lines of credit in addition to your mortgage can end up throwing your numbers off quite a bit, stalling the home-buying process for you; it can easily be the difference between qualifying for a home loan and not qualifying at all. Once you close on your next home, then you can do whatever you want with your finances. Until then, however, hold off on major purchases.

3. Don’t Co-sign on Any Loans

You may just be trying to help someone out, but regarding your credit report, cosigning has the same detrimental effect as opening up a brand-new line of credit for yourself. Your lender will have to count it as a credit against you, once again jeopardizing your chances of qualifying for a home loan.


4. Don’t Change Any of Your Bank Accounts

It’ll make things much simpler if you just stick with the same accounts you’ve been using. If, for whatever reason, you have to switch bank accounts, just make sure you speak with your lender first.

5. Don’t Even Think About Applying For New Credit

Whereas No. 2 cautioned against purchases that require finances, this warning refers specifically to opening new credit cards. You may receive what seems to be a stellar offer (zero APR for X amount of months, no hidden fees, etc.) but there’s no credit card opportunity worth ruining your chances to qualify for a home loan. Even if you don’t plan to actually put anything on it until after you’ve closed, don’t even apply prior—the inquiry alone counts as a hit against your FICO credit score.

6. Don’t Close Any Credit Accounts

This one may sound pretty counterintuitive, but lending institutions look at many different factors, one of which being the length of your credit history.

Let me hammer home the point: As a general rule, consult with your lender before making any sort of financial decision during the lead-up to your home loan qualification process; all too many times throughout my career as a real estate professional, I’ve seen folks with the best of intentions fail to qualify for a loan simply because they weren’t as careful as they could have been.

A real estate transaction is a complex thing, which is why it’s imperative that you always defer to a professional. Speaking of which, we here at Anthony REALTORS are always here if you need us; just give us a call or send an email if you ever have any questions pertaining to buying or selling a home and we’d be happy to chat with you!

Connect With Us!

If you're looking to buy or sell a property connect with us today!

We’ve helped over 1,000 families move in the Fort Wayne area. How Can We Help You?

  • This field is for validation purposes and should be left unchanged.

Leave a Reply

Your email address will not be published. Required fields are marked *