There are many items to keep track of during the mortgage financing process and it’s easy to overlook what not to do. Here are 6 common mistakes to avoid when buying or refinancing, and why.
Mistake #1: Don’t Apply for New Credit
New inquiries for credit can signal you are attempting to take on additional debt. It may also impact your credit score. It’s advised not to apply for new credit until after the home loan financing process is complete.
Mistake #2: Don’t Make Large Purchases
It’s okay to look but it’s important to be mindful and not make large purchases while in the loan process. Doing so may impact your debt-to-income (DTI) ratio and/or your FICO score. These are two critical factors a lender evaluates.
Mistake #3: Don’t Spend Your Savings
You may find you need to pay for a down payment, closing costs, home appraisal or home inspection. It’s always helpful when you have a little extra in the bank!
Mistake #4: Don’t Change or Quit Your Job
It is recommended to have at least 2 years of work history established before applying for a mortgage loan. If needing to change your job during the loan process, it is best practice to contact your licensed loan officer for guidance immediately to prevent possible delays.
Mistake #5: Don’t Finance a New Car
Consistency is key during the loan process! Financing a new car may cause your credit to be pulled creating a new credit inquiry, impact your DTI score and/or lower your monthly income. It is also advised not to cosign a loan.
Mistake #6: Don’t Miss Payments
If there are missed payments when a lender if reviewing your payment history, it may signal to the lender there is an increased level of risk and potentially require a new loan approval or cause delays in your desired closing date.
When in doubt, wait it out! If you have a question about an expenditure or an impending change set to occur during the mortgage loan process, contact your licensed loan officer for guidance.