Whether you’ve applied for a mortgage or are in the process of applying, it’s important to stay vigilant with your finances and not make any big changes until the transaction has gone through.
To be safe, we recommend speaking to a mortgage professional throughout the process and get their advice before making any significant changes that could affect your credit.
Here are some general areas to be aware of when applying for a mortgage:
Don’t Make Large Purchases on Credit
When applying for a mortgage it’s important to ensure that you avoid making any large purchases on credit. Things such as a car, furniture, jewelry, or other large luxury items should be avoided.
Any new debt will most likely include new monthly obligations, which can result in a higher debt-to-income (DTI) ratio and make for riskier loans. So even if you have already qualified for a mortgage, you will no longer qualify due to your new DTI ratio.
Don’t Change Your Job or The Way You’re Paid
Mortgage lenders put a lot of focus on employment history and will not only verify the jobs you’ve had, but will look closely into your last two years of employment. The purpose of this is to make sure that you have a good source of income in order to be able to repay your loan.
Lenders will be tracking any changes to your annual income so if possible, refrain from changing jobs or altering how you are paid. You will also want to avoid switching to self-employment during this time, or if you must, consult a mortgage specialist.
If you absolutely must change your job, one tip is to make sure that it is within the same industry, and part of your long-term career plan so that you can easily justify the move.
Don’t Apply for New Credit or Close Existing Credit Accounts
Once you’ve applied or have been approved for a mortgage refrain from applying for new credit or credit cards. This will affect your credit score and can impact the interest rate or even eligibility of the mortgage you’ve been approved for.
Also, be careful not to close any credit accounts during the loan process as a good portion of your score comes from your credit history.
Don’t Make Large Cash Deposits
Having large amounts of cash in your bank account can sometimes act against you in the process of applying for a mortgage. Cash is hard to trace and your lender will need a source for the money. Unexplained deposits can sometimes look like you took a loan or received a cash advance in order to add money to your account.
Discuss the proper way to document transactions with your mortgage advisor, and be prepared to show proof of where all your funds have come from.
Don’t Co-Sign on Other Loans
Co-signing means you are agreeing to pay off someone’s debt when that person fails to make a payment. This is an automatic red flag for a lender and will affect your eligibility to get a mortgage.
For more information on applying for a mortgage in Whistler, contact one of our local Realtors who can assist you in the process and make recommendations of local, trusted lenders.