Finding a new home to purchase in Orlando can be exciting. However, there are some precautions to take when applying for a mortgage. The home loan process can take time, and during this time, you must be consistent with your spending habits. Be sure you discuss any asset, credit, and income changes with your Orlando lender to avoid jeopardizing your loan approval.
Avoid changing jobs or the way you get paid at your job: Your loan officer must track the amount as well as the source of your annual income. If possible, avoid becoming self-employed or changing from salary to commission during this time.
Avoid depositing large sums of cash into your bank accounts: Lenders are interested in sourcing your money, and cash is not very traceable. Before making any deposits in your accounts, consult with your loan officer on the proper documentation of your transactions.
Avoid making large purchases such as new furniture or a car: Adding new monthly bills brings new debt, and individuals with new debt will have a higher debt-to-income ratio. In the lender’s eyes, this makes for riskier loans, and in some cases, qualified borrowers will no longer qualify.
Avoid co-signing other loans for anyone: You become financially responsible for the loan when you co-sign for someone else, and this also creates a higher debt to income ratio for you. Even if you are not making the payments, the lender will still count the new debt against you.
Avoid changing bank accounts: Always keep in mind that lenders need to source and track your assets; consistency with your bank accounts makes this much more manageable. Consult with your loan officer even before transferring money between accounts.
Avoid applying for new credit: It doesn’t matter whether it’s a new car or a new credit card. Your FICO score will be affected when organizations in multiple financial channels such as auto, mortgage, or credit card companies run your credit report. Low credit scores can affect your interest rate and even your eligibility for loan approval.
Avoid closing any credit accounts: Many Orlando borrowers have the misconception that having less available credit reduces their risks, and if they close some accounts, they are more likely to be approved. This is wrong! A significant factor of your FICO score is the length and depth of your credit history, not just your payment history.
Bottom Line
Any changes in assets, credit, or income should be reviewed and handled in a way that ensures you’ll be approved for your home loan. The best way is to be transparent and discuss any plans with your loan officer before making any significant financial decisions that could jeopardize whether or not you get a home loan. These experts are skilled in guiding you through the process and increasing your home loan approval chances.
