Buying a house can be stressful. You have to go through listings to find your dream home. After that, you need to start applying for a mortgage. Then, you need to consider the precautions for your spending and financial actions while waiting for the mortgage approval process completion.
To ease these burdens, we’ve listed the things you should not do when applying for a mortgage. This way, you can increase the chances of having your mortgage application approved and securing your dream home. You can communicate with your trusted South Shore MA realtors and get advice on how to successfully work through the mortgage process. You can also reach out to the loan officer before thinking of changes that can affect your credit.
Things you should not do after applying for a mortgage
1. Make Large Purchases
It can be exciting to start purchasing pieces of furniture and decorating your new home. However, it’s best to hold that thought.
Once you have officially signed your mortgage application, you must be careful about how you spend your money until you have closed on the property. New homeowners often think that once they submit their application and endorsement letter, the home loan process is finished, which is not true. Your application can be denied if you are not careful.
Loan officers will keep track of your flow of income, credit score, and resources, including bank deposits. They will pull out new credit reports and assess whether you can pay your mortgage. Any questionable changes can have your mortgage application blocked.
What is Considered a Major Purchase?
So, does applying for a mortgage mean you can’t buy anything for your new home? The answer is no. You can still rely on your on-hand resources and monitor your spending.
If you purchase goods and services that are worth more than $10,000, that is considered a major purchase. Basically, it’s the expenses that can affect your credit score and salary after taxes. That is why you should think twice before spending. Here are a few examples of major purchases:
● New Car
● Expensive Wedding or Celebrations
● Extensive Home Renovations
● Buying Another House
● Expensive Vacation
2. Changing Jobs, if possible
Do you plan on changing jobs? Or maybe you got a new job offer outside town? We advise you to think twice about doing so.
Any changes in your pay, especially your salary, can greatly affect the approval of your mortgage. Why? Because this can affect your capacity to pay off your mortgage and lessen the chances of mortgage approval. This is particularly true if your pay suddenly decreases when you change jobs or have your “regular employee” status change to a contractual one. These changes could affect your debt-to-income ratio, which lenders use as the basis of your ability to make payments.
If your debt-to-income ratio changes negatively, it will make your lenders apprehensive and shake their trust in your ability to pay off debt. So it’s best to hold off applying for your next job. However, if you think changing jobs will positively increase your debt-to-income ratio, consult your loan officer or your real estate agent for professional advice.
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3. Co-signing Any Credit
Co-signing in a loan means that you will assume the borrower’s debt in the event that the borrower is unable to pay. This means that the lender could come after you when the borrower defaults on the loan. You will be held legally responsible for paying the principal, interest, and other debt related to the borrower based on the contract you signed. Thus, you need to be careful about co-signing a loan, be it during the mortgage application and in general.
If your lender finds out that you co-signed any loan after applying for a mortgage, you might be labeled as a high-risk borrower and your mortgage application may be denied.
Buying a House in Massachusetts? Apply for Mortgage
You might think getting a mortgage is challenging, but it doesn’t have to be. You just have to avoid making big negative changes to your pay, resources, or credit. If any changes occur, don’t hesitate to communicate with your loan officer or reliable real estate agent.
At Team Garner Realty, our agents help you in buying a house in Massachusetts and guide you in applying for a mortgage. We would love to make sure that you get to own your dream home. Reach out to us and call 781-829-4301 today. We would love to communicate with you.