No Sudden Financial Moves
Once your lender preapproves you for a mortgage, and you have paid to start the application process, you need to make sure not to do anything that will cause the bank to think twice. Otherwise, you will have to deal with the consequences of delays or contract termination.
The risky behaviors that you must avoid are in three categories: Do not do anything that adds a new entry into your credit report; do not change your employment basis; do not make any unusual activities on your bank account. Anything that changes your debt-to-income ratio will cause alarms to sound in your lender’s office.
The critical period in applying for new home loan financing, whether you intend to buy or refi, is between the initial application and closing. This period can be long enough without complications, anything that alerts your lender of a change in your status will cause a delay until it resolves to their satisfaction, or it will just terminate the contract.
3 Groups Of Behaviors That Will Delay Your Approval
Keep your bank account steady – Any large deposits or transfers into, out of, or between your bank accounts could look like suspicious activities, and that will certainly provoke delays. Also ensure that you report any gifts, such as help from family members as well-intended offerings are common causes of delay.
Do not cause any credit report changes – No new borrowing; it does not matter if you get the best rate in the world just do not do it. The prohibition on new credit means no new store cards, credit cards, or auto finance loans or leases.
No changes in the workplace – Do not alter your basis of income, for example, do not give up your salary for a commission-based job, even if it promises to pay you much more. And do not become self-employed. Your lender is not going to look at your potential, or how much you earn, all they care about is that you changed.
What Happens When The Alarms Go Off?
Delays in closing are annoying; real estate transactions bring stress, and frayed nerves; even the relatively small upset of a refi can escalate if any delays add to the uncertainty of closing. If you are buying a new home, the stress and uncertainty rise to another level.
The fear of losing the home that you have set your heart on is not a pleasant experience. If a lender decides there are grounds to terminate your contract, you will have to start the process all over again with another lender, at additional cost, or it could jeopardize the transaction entirely.
Avoid these sorts of upsets by being very careful during the process to prevent any changes in your finances, applications for credit or changes in your career. There will be temptations that pop up right at the critical times, at those times it will be a matter of self-discipline that keeps your mortgage on track for closing.