Just because you have applied for a mortgage loan doesn’t mean that your life is on pause. You still have to live your life throughout the process and so it is important not to make a mistake while the paperwork is being processed and loan is being determined. Below are five common mortgage mistakes that can compromise the home loan approval.
- 1. Increasing your debt. Your debt-to-income ratio is an important factor when being considered for a loan. If you add to your debt, you risk exceeding the ratio that your lender finds acceptable. So you may want to hold off on that new car or boat.
- 2. Opening or closing credit accounts. Getting a new low- or no-interest credit card could sure come in handy to buy appliances, furniture and landscaping. But the application’s credit inquiry will ding your credit score for a few points, and the lender might wonder just how much you plan on spending with that card. Even closing a credit account, which seems a positive step, can lower your credit score because your overall available credit has lessened.
- 3. Missing a bill payment. This one may strike you as laughable, but it’s easy to forget to pay the gas bill when you’re figuring out how to move your family and all your worldly possessions. On-time payments are a huge plus for your credit score, so stay on top of your bills.
- 4. Moving your money around. You have to provide your latest bank statements before you can get your loan. Big changes in balances are not something lenders like to see. If you have to move money, make sure you can document the transactions and explain their purpose.
- 5. Changing jobs. You don’t have to pass on a great career move, but changing employers could delay your settlement due to employment and salary verifications.
Part of the mortgage process is a final check to ensure that you can afford the loan and have the ability to repay it. Neither you nor the lender wants the payments to be a struggle so don’t make these mistakes during the process (and ideally afterwards either).