Key Considerations Before Closing
Congratulations! You've taken the exciting step of applying for a home loan, envisioning your dream home and the memories you'll create there. Before you dive too deep into the emotional aspects, it's crucial to keep some key considerations in mind between applying for your mortgage and closing the deal. Here's a checklist of things to remember during this crucial phase of your home-buying journey:
1. Mind Your Cash Deposits: Avoid depositing large sums of cash into your accounts without discussing it with your loan officer first. Lenders need to trace the source of your money, and cash transactions can be challenging to document. Before making any deposits, ensure you understand the proper way to document these transactions to smoothen the approval process.
2. Resist the Urge for Large Purchases: It's not just home-related expenses that can affect your loan approval. Any significant purchases, be it furniture or appliances, can raise red flags for lenders. Such expenses contribute to higher debt-to-income ratios, impacting your eligibility for the mortgage. Steer clear of large purchases until after closing to secure a smoother home-buying experience.
3. Avoid Cosigning Loans: Cosigning for someone else's loan can have repercussions on your debt-to-income ratios, even if you're not responsible for the payments. Lenders will consider this added financial responsibility, potentially affecting your mortgage eligibility. Refrain from cosigning loans during this crucial phase of securing your own home loan.
4. Maintain Consistency in Bank Accounts: Lenders need consistency in tracking and sourcing your assets. Avoid switching bank accounts before consulting your loan officer. Maintaining stability in your accounts streamlines the process for lenders, making it easier for them to assess your financial situation accurately.
5. Steer Clear of New Credit Applications: Whether it's a credit card or a new car, refrain from applying for new credit during this period. Multiple credit inquiries from different financial channels can impact your FICO® score, influencing your interest rate and approval chances. Prioritize your home loan by avoiding new credit applications until after closing.
6. Don't Close Existing Accounts: Contrary to popular belief, closing accounts doesn't necessarily make you less risky to lenders. Your credit score considers the length and depth of your credit history, along with your total credit usage. Closing accounts can negatively impact both aspects of your credit score, potentially affecting your mortgage approval.
7. Communicate Changes with Your Lender: Transparency is key. Keep your lender informed about any changes in income, assets, or credit. Discussing these changes ensures that your home loan remains on track for approval. If there have been recent changes in your job or employment status, share this information with your lender promptly.
For a smooth and successful home purchase, consult your lender before making any significant financial decisions. Whether it's large purchases, changes in accounts, or major life events, your lender is your guide to understanding how these decisions may impact your home loan. By staying informed and proactive, you can navigate the home loan process with confidence and achieve your dream of homeownership.
For additional information, contact Alaskan Properties at (907) 694-3434.