Whether you are purchasing your first home or refinancing your mortgage, there are harmful things you can do to jeopardize your own approval. Here is our list of what to avoid and why:
- Don’t change your job. Depending on how long you have to purchase or refinance, you could wait this one out, but typically mortgage providers are required to see you have stable employment. When you move between jobs, the mortgage provider will then need to wait until you are out of your probationary period. With probation often lasting about 3 months, this can hurt your purchase or refinance application in this window. Occasionally, if you have been in the same industry, the employer may waive the probationary period, but I wouldn’t count on it!
- Don’t buy a car. This is a big mistake for many borrowers. When you are being qualified, mortgage brokers take all your debt, loans, and car payments into the calculations for your mortgage approval. Car payments themselves can range from $200/month to $800/month. With that in mind, these payments reduce your monthly cash flow, and in turn reduce the amount you can be eligible for in mortgages. The best bet is to wait until after your mortgage funds to buy a car.
- Don’t extend credit balances further than when you were approved. With your mortgage approval, we are required to use a 3% payment on most of your debts (unless there are set payments such as car loans or other set obligation loans).
- Don’t miss any payments. When you are approved for a mortgage, the mortgage provider takes into account your income situation, your credit worthiness, and overall property to approve your mortgage. With that in mind, you do not want your credit situation to change – this means keeping all payments up to date and ensuring none slip to past due. Mortgage providers will usually do a final credit check right before funding to ensure everything is still in order. You do not want your mortgage approval getting cancelled at the last minute!
- Don’t make unusual or large deposits between accounts. When you are approved for mortgages, the bank requires 3 months of statements showing the accumulation of your down payment. When there are large deposits (typically over $3,000) which are not payroll deposits, these deposits must also come with 3 months of statements from the transfer account. That means if you are moving a lot of money around, this could be a headache to gather the appropriate statements.
Despite these things to avoid, the home buying process shouldn’t be challenging or alarming. Once your mortgage provider supplies you with your mortgage funds, you will be able to go buy that car you want, change your job, or extend credit card balances. But don’t neglect to make your mortgage payment!