Buying a home is both an exhilarating escapade and a formidable, nerve-racking occurrence, particularly during the initial stages when aspiring homeowners anticipate a mortgage qualification verdict. To heighten the likelihood of mortgage approval and assuage unnecessary anxieties, avoid ubiquitous homebuyer missteps. This article reveals the quintet of things that Cherokee County home buyers should shun after filing a mortgage application.
Avoid Opening or Closing Lines of Credit
Potential homebuyers must refrain from opening or closing lines of credit when applying for a mortgage. During the pre-approval process, your credit is scrutinized, and a final assessment is conducted before closing. If lenders detect any sketchy credit issues, final approval is denied. Launching new lines of credit is a primary culprit that lowers your credit score and increases your debt-to-income ratio (DTI), ultimately negating final mortgage approval. Similarly, closing credit lines adversely affect the length of credit history, which is essential for mortgage approval. To avert this issue, leave the lines of credit open but unused until the closing process concludes.
Avoid Credit Card Maximums
Maxing out your credit/credit cards following a mortgage application is another crucial no-no. It is one of the worst things to do before closing a mortgage. It increases debt vis-à-vis income, resulting in a reduced mortgage amount qualification, and incurs higher loan costs due to lower credit scores. Your overall debt doesn’t matter as much as your debt-to-credit limit ratio. Keeping credit utilization below 30% of your credit limit is a sound recommendation.
Don’t Make Significant Credit Purchases
Refrain from purchasing big-ticket items on credit after filing for a mortgage. It may harm your debt-to-income ratio (DTI), reducing the likelihood of mortgage eligibility. It’s tempting for homebuyers to splurge on furniture and appliances after an offer is accepted and closing is imminent, but it’s best to wait until after the closing.
Avoid Job Changes
Job changes after filing for a mortgage may jeopardize mortgage approval, although it may advance your career. Lenders must be confident that their income stream is stable and secure.
Don’t Forget to Pay Bills on Time
When applying for a mortgage, pay all bills on time. Late payments may reduce your credit score and negatively impact mortgage approval. Ensure that all bills are paid before and after the mortgage application process.
Don’t Take Chances After Applying for a Mortgage
These are the 5 most important things to avoid doing after applying for a mortgage, but there are many other things that can also endanger your mortgage eligibility and/or delay closing. Don’t take any chances here. Be sure to work closely with an experienced Atlanta agent who can guide you through the whole process and help you avoid the pitfalls. So if you’re a Atlanta home buyers and want to be sure everything goes smoothly after applying for a mortgage, contact us today at 770-280-4560.
FAQs
Q: Why should I avoid opening or closing lines of credit after applying for a mortgage?
A: Opening a new line of credit can lower your credit score and increase your debt-to-income ratio (DTI), which can cause a lender to deny final approval of the mortgage. Closing a line of credit can also damage the necessary length of credit for mortgage approval.
Q: Can I use my credit cards after applying for a mortgage?
A: Yes, you can use your credit cards, but it’s recommended that you keep your credit utilization below 30% of your credit limit. Maxing out a credit card can result in your qualifying for a smaller mortgage amount and a lower credit score, which can make your loan cost more.
Q: Can I make large purchases on credit after applying for a mortgage?
A: It’s best to avoid making any large purchase on credit until after closing. New debt with greater obligations in monthly payments will be detrimental to your debt-to-income ratio (DTI), which is one of the main things lenders factor into mortgage eligibility.
Q: Why should I avoid changing jobs after applying for a mortgage?
A: Lenders want to be assured that you have a stable income and employment history. Changing jobs can endanger your mortgage approval.
Q: What are the common mistakes and missteps to avoid when applying for a mortgage?
A: The common mistakes and missteps to avoid when applying for a mortgage include opening or closing lines of credit, maxing out credit cards, making large purchases on credit, and changing jobs. These can all affect your credit score and debt-to-income ratio (DTI), which are key factors in mortgage approval.
The Key Takeaways From this Article are:
- Avoid opening or closing lines of credit as it may negatively affect your credit score and debt-to-income ratio.
- Do not max out credit cards or take on significant credit purchases as it may reduce the likelihood of mortgage eligibility.
- Refrain from making job changes as it may jeopardize mortgage approval.
- Pay all bills on time to maintain a good credit score and improve mortgage approval chances.
- Avoid splurging on big-ticket items on credit until after the closing process.