As a buyer, you are justifiably filled with excitement about the largest purchase you will ever make. But slow down … and contain your excitement just a bit. There are pitfalls you must avoid on the road to homeownership, as they may impact your loan approval.
- Don’t open any new credit accounts before or during the mortgage loan application process.
- Any new debt can negatively affect your credit score and may affect your ability to qualify for the loan you want.
- Buyers beware: Lenders may pull another credit report 3-5 days prior to your closing to ensure no new credit has been established.
- Don’t move money around in your checking/savings accounts.
- Most of the time, deposits into a checking/savings account must be verified by source and can become a problem if the source is not acceptable, i.e. cash is not considered an acceptable source of funds because its origin cannot be verified.
- Consult with your lender regarding how to document gift funds from a relative, prior to making your deposit.
- Don’t change jobs or the way you are compensated.
- A change in your job, unless it is with the same company and is a salaried position, can jeopardize your loan approval. Lenders are looking for job history and consistency of employment as they evaluate your loan request.
- Don’t make a change from salaried to commission. Commission or bonus income must be averaged over a two-year period and you must have a history of earning income this way.
- Don’t make a change from a full-time employee to a contract employee, even in the same company. Contract employees are subject to either a minimum three-year contract or a two-year history of contract employment.
This mortgage loan application process can take a month or more, so be careful to not make any moves that could jeopardize your loan approval. A little patience during these final weeks will result in a smoother, quicker closing – and the joy of homeownership.
For more information on what not to do when you’re buying a home, contact your Allen Tate Mortgage Consultant or your Allen Tate Realtor®.
By Lisa Green (Vice President of Loan Origination)
Allen Tate Mortgage Services, Inc. is a licensed Mortgage Lender in NC (L-113841) and SC (MLS-79543). NMLS Company ID: 79543