Here are some tips for anyone that has been approved for a mortgage. Once you have been approved and provided all of your supporting documents to your mortgage broker there are some guidelines to follow to ensure that you do not run into any problems with your mortgage funding come closing day.
- Thou shalt not change jobs, become self-employed, quit your job or change the way you are paid. Your employment may be re-verified within 30 days of your closing date and any changes could affect your mortgage approval and the ability to fund.
- Thou shalt not finance a car, truck or van (or you may be living in it)!! Applying for financing creates an inquiry on your credit bureau which could decrease your credit score. As well the increase in liabilities could decrease the amount you qualify for on your new mortgage.
- Thou shall not use credit cards excessively or let accounts fall behind. This also applies to credit lines. Using more than 70% of your credit limit negatively impacts your credit score. Any late payments will also significantly impact your credit score, no matter how small the payment due is. Increasing your balances also may impact the amount you qualify for on your new mortgage.
- Thou shall not spend money you have set aside for downpayment or closing costs. Having this money available is critical to getting your keys on closing day. It is also a good rule of thumb to have extra set aside for the unknown expenses that can come up at or after closing.
- Thou shall not omit debts or liabilities from your mortgage application. Disclose all debts and liabilities at the beginning of the application process. Details are thoroughly checked and double-checked so they will eventually be discovered. If discovered late in the process they could jeopardize your approval.
- Thou shall not finance furniture or appliances. Large purchases especially with deferred payments can impact your borrowing power and your credit score. Check with your mortgage broker before making these purchases.
- Thou shall not originate any inquiries into your credit. Credit reports can be refreshed within 7 days of closing and new inquiries could cause more documentation being needed.
- Thou shall not make large deposits without checking with your mortgage broker. Abnormal or large deposits into your bank accounts must be verified and source of the funds provided. This may result in extra documentation.
- Thou shall not change bank accounts. This may result in more documentation being required for verification or downpayment, closing costs and/or income.
- Thou shall not co-sign any loan for anyone. Co-signing any type of loan, car, student or otherwise, will result in increasing your liability obligation and thus may reduce the mortgage amount you qualify for. It also creates an inquiry to your credit bureau which could negatively impact your score. Even if you are not the one making the payments, you are still responsible for them.