Congratulations! Now that your mortgage has been preapproved, you can finally say you are soon a proud homeowner of your dream home. But wait, know that it is yet the time to celebrate, not until your final closing.
That’s right. Even homebuyers who already got preapproved for a mortgage can jeopardise their chance to buy one of the new homes in Townsville they have been dreaming of buying. This is why you should always be careful of the decisions you make.
But what are the exact things you should avoid to make sure you don’t put your mortgage approval at risk?
Open a new line of credit
Think you are already safe after receiving news that you got preapproved for a mortgage? Applying for a new loan or credit line can have a huge impact on your credit score and your Debt-to-Income ratio. You may not think like it, but most lenders will check your DTI ratio and credit score again before closing.
If there are any changes like an increase in DTI ratio, your lender may choose to delay or worse, deny your approval.
Change of career
Lenders will need to ensure you can actually afford your mortgage. If you change jobs, make sure you talk to your lender first. Usually, if you will be staying in the same industry and your compensation is basically the same, you will not have an issue with your home loan.
However, if you are shifting career in a different industry and your compensation will be different, then things can get a little complicated. Talk to your lender the soonest time possible to check how this can affect your mortgage.
Buying brand new furniture and appliances
Big appliances and brand-new furniture can cost you a huge amount of cash. Such big purchases can affect your mortgage, no matter how you plan on paying them. If you pay via cash, it can affect your budget, which you will for your down payment, cash reserves, closing costs, etc.
If you use your credit card or apply for a loan, your score may suffer and cause your DTI ratio to shoot up.
Late or missed payments
You are more likely to have other forms of debt aside from your mortgage. This can include your student loan, car loan, credit card debts and other loans. If you fail to pay your dues on time, this will show up your credit report.
Since lenders will also check your credit report, they can find out about your recent missed payments and may be unsure of your capability to pay them off. This can cost your home loan even if you’re now only waiting for the closing day.
Pay your debt in full
Another no-no is paying off all of your other debts. But why would your lender deny your mortgage if you paid off your other loans? Would this not mean you now have less or no more obligations to pay aside from the mortgage if it gets approved?
This is always not the case when you pay off your debt. You will either acquire another loan to consolidate your debt, pay with via your credit card or with cash. Know that every financial move you make have a direct impact on your finances, meaning you’ll either have more debt or reduce your assets.
Don’t let foolish decisions take away your chance to acquire your dream home. Take note that every decision can affect your final loan, so it’s best to take precautions in everything you do. To be sure, ask your lender for the things you should avoid doing.
They will most probably tell you the same things listed on this list.