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Health & Fitness

Applying For A Loan? 7 Things NOT To Do Until Closing.

While it’s easy to find a wealth of information on what to do during the loan process (gather paperwork, save for a down payment, etc.), did you know that there are several things that you should not do before your loan has closed?   Don’t make the mistake of assuming that because you are prequalified or your application is in underwriting, you don’t have to worry about job changes, credit card balances or additional purchases.  Even if you have great credit, there are things that can make lenders think twice and cause your loan approval to grind to a halt.

Here are 7 things that you should absolutely, positively NOT do until your loan has closed:

  • DO NOT make any large purchases (such as a car, furniture, boat).  This can increase your debt-to-income ratio and that’s something loan officers don’t want to see.  Wait until after your loan closes to make buy any big ticket items.
  • DO NOT be late on credit card payments or charge excessively.  This also applies to student loans, car payments, rent, utilities, etc.  You need a track record of responsibility and show that you can manage your money.
  • DO NOT apply for any new credit or co-sign for a loan while your mortgage is being approved.  This could also lower your credit score.  If a credit check is pulled again prior to closing, you may no longer qualify.  Don’t close any credit card accounts either.
  • DO NOT make large deposits or withdrawals that you cannot document.  Lenders want to see that the money you’re using for a down payment has been sitting in your account for at least two months (what they call “seasoning”) so that the funds don’t just appear out of thin air.
  • DO NOT quit your job, even if it is for a better one.  Lenders want to see stability, meaning you’ll be less likely to default on the loan.   A change in employer will also mean that you will have to produce 30 days’ worth of pay stubs for the new job – delaying closing.
  • DO NOT change banks or move money around.  Like your employment, you want your banking history to show stability.  This includes checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and even your company 401K and retirement accounts.
  • DO NOT lie or make any omissions on your loan application. Sounds like a no-brainer, but if you do – it’s called fraud.

When you’re in the purchase process and have any questions at all, make sure to call your mortgage broker.    This small investment in taking the time ask, could save you hours or weeks of delay and headache later on.

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Pam Wright | OnQ Financial
404-445-1033 | pam.wright@onqfinancial.com

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