When starting the pre-approval process, you should not do anything that will have an adverse effect on your loan from this point through your closing date. It may be tempting to start opening credit cards for furniture and other miscellaneous items, but this is the time to keep your financial picture frozen in a stable position until your loan closes. The slightest mistake can cost you thousands of dollars or the ability to obtain financing.
Whether you’re purchasing or refinancing a property the lender will pull your credit upfront. Throughout the process you can continue to use your credit as usual with gas cards, grocery shopping, clothing stores..etc. What you want to avoid is “new credit” being established through credit pulls, new debt, new car purchases.
The only exception to this is an absolute emergency where new credit needs to be established or a large sum needs to be charged to your existing accounts. It is typical for the lender to do a soft pull once your loan has been fully approved. Its to protect them from any unforeseen transactions that could effect your ability to repay the loan. If you find yourself unsure this guide will help you below or make sure you are transparent and ask your loan officer before any charges. Once the charges happen during the loan process even if you can afford the payment it creates extra paperwork and could delay your closing.
- Do stay current on your existing accounts.
Any late payments (existing mortgage, cars, credit cards, or anything else) on your credit will cost you dearly and can even keep you from getting financing.
- Do keep using your credit as you normally would.
Now is not the time to start changing any patterns to your normal spending.
- Do call your local mortgage expert.
It’s best to call if you have any questions or concerns before/during the loan approval.
- Don’t make any changes to your employment.
Quitting or changing jobs within the same company can wreck your entire loan approval.
- Don’t apply for new credit.
No opening new accounts for furniture, appliances, computers, etc. until the loan has closed.
- Don’t pay off collections or charge-off accounts.
This will usually result in lower scores. Do not do this unless we tell you otherwise.
- Don’t make any adjustments or transfers in your assets.
Keep your money where it’s at. No deposits other than payroll.
- Don’t over charge or max out your existing credit cards.
This is a quick way for your credit scores to drop. You want to keep the balance.
- Don’t consolidate your debt to one or two cards.
Again, this could put you over the 30% threshold which would affect your credit scores.
- Don’t close credit card accounts.
This can affect your ratio of debt to available credit which has a big impact on your credit.
These Credit Tips Before and During The Mortgage Loan Process will ensure a smooth closing with no delays or unexpected paperwork.
For more information about our mortgage loans, their benefits and loan options and how it may apply to you, please contact us direct at 281-627-4222 or submit the quick quote form on this page.