Consistency is the name of the game after applying for a mortgage. Be sure to discuss any changes in income, assets, or credit with your lender so you don’t jeopardize your application!
When you applied for a mortgage loan and received your pre-approval, you may recall having to provide a lot of different things like income documents, proof of employment, list of assets, etc. One such document was your bank statement. If you change bank accounts, you will have to go through the same process all over again, and that usually means waiting at least 60 days for your loan to be approved, again. It may even require a letter of explanation, so it’s simply not worth it in most cases.
The temptation is great but resist the notion of opening new accounts. Your mortgage pre-approval was based on a certain credit profile and score. Underwriters can pull a soft-credit pull at the end of the underwriting process. These soft credit pulls are aimed to determine if any new debt has been established. If any inquiries or accounts show up, underwriting will require documentation to reflect debt balances and payments. Any additional debt could alter qualifying ratios causing a denial.
Most borrowers already have existing credit cards with credit limits established. After you’ve applied for a home mortgage loan you need to stop, or reduce, your credit card spending. Increasing the spending will not only raise your monthly payments (higher balances = higher minimum payments), but you could also decrease your credit score if your balances get closer to the credit card limit.
Depositing cash deposits is frowned upon because it’s tough to document. How does an underwriter know where the cash came from? If you have cash to deposit, talk with your loan officer about it first. To be safe, anything over $200 that is not a part of your normal monthly income should be mentioned to your loan officer.
In addition to the impact on your credit scores, lenders may include the payments you cosigned for when calculating your debt-to-income (DTI) ratio. A high DTI can make getting a loan or line of credit more difficult.
This weekly Sponsored Column is written by Fountain Mortgage. Located in Prairie Village, Fountain Mortgage is dedicated to educating, and thus empowering, clients to make the best financial decision possible for their situation. Contact Fountain today.
Mike Miles NMLS ID: 265927; Fountain Mortgage NMLS: 1138268