The Don'ts of Home Loans

So you’ve just applied and gotten approved for a mortgage loan. Congratulations! You did all the work to save for a down payment, shop the best interest rate, find a lender, and get approved. After checking all those boxes and getting approved for your loan, you may think that all the hard work is done. After all, it’s your money. Shouldn’t you spend it how you see fit? Not exactly. Read on to find out the things to never do once you’ve been approved for a mortgage loan. 

Deposit Large Sums

As you go through the process of purchasing a home, every financial transaction you make is closely monitored by your loan officer. Because lenders need to source your income, they discourage depositing large sums of cash because it cannot be traced. If you find yourself with a large cash deposit, contact your loan officer before depositing to talk about the best way to handle it. 

Make Big Purchases

A home itself is basically the largest purchase you could ever make. Making a large purchase, like furniture or appliances (even if they’re for your impending new home) can drastically change your debt-to-income ratio. A higher ratio makes for a riskier loan, so messing with this number during the underwriting process is bad news. 

Apply for New Credit

This one kind of goes with making big purchases. Every time your credit is pulled, whether you’re opening a store credit card or trying to buy a car, it affects your credit score. A lower credit score can determine what mortgage rates you receive, or maybe even if you’re eligible for approval in the first place. 

Co-Sign for Someone

When you co-sign on someone else’s loan, you are essentially becoming responsible for repayment on that loan. You might think that since you’re not the person making the payment that co-signing won’t affect your eligibility for a mortgage. However, your lender technically has to count those payments against you in the event that you do have to assume payments. 

Essentially, you want your home buying process to be as seamless as possible. If you’re currently in escrow or underwriting and have a question about finances, call your loan officer for advice or guidance. That’s what they’re there for!