I recently had a client who went from pre-approved to denied by her mortgage lender because she cancelled a credit card. Cancelling a card immediately effects your credit score but it is not the only thing that may affect your ability to get a mortgage, here are a few other things to avoid while you are buying a home:
- DO NOT apply for new credit – this will do the same as cancelling old credit, lower your credit score. As a new inquiry, lenders can see where and when you applied for the credit.
- DO NOT furnish home – unless you can afford to do so without applying for credit or spending funds for the home purchase.
- DO NOT get a new car – this will also decrease your credit score and it will increase your monthly debt obligations, causing a double hit to the factors of qualifying for a mortgage loan.
- DO NOT change jobs – some lenders say this is no problem only if you are staying in the same industry and your income will increase
- DO NOT transfer money – all money transfers must have a paper trail. Without sufficient paper trails this will look like money laundering, which is an immediate reason to deny any loan application.
- DO NOT spend savings – you’ll need your saving, so whatever you do please (I’m begging) please do not let the money you have saved burn a hole in your pocket. It will be worth it in the end.
- DO NOT get behind on payments – maintain good payment history on all of your bills and follow these tips above and you will be on your way to a new home!