Consistency is the name of the game after applying for a mortgage. Be sure to discuss any changes in income, assets, or credit with your lender so you don’t jeopardize your application!
When you applied for a mortgage and received your pre-approval, you may remember having to provide many different items, such as income documents, proof of employment, list of assets, etc. One of these documents was your bank statement. If you change bank accounts, you’ll have to go through the same process again, which usually means waiting at least 60 days for your loan to be re-approved. It may even require a letter of explanation, so it’s just not worth it in most cases.
The temptation is great but resist the idea of opening new accounts. Your mortgage pre-approval was based on a certain credit profile and credit score. Underwriters can draw soft credit at the end of the underwriting process. These soft credit draws are to determine if new debt has been established. If inquiries or accounts appear, the underwriting will require documentation reflecting debt balances and payments. Any additional debt could change qualification ratios resulting in denial.
Most borrowers already have existing credit cards with established credit limits. After applying for a mortgage, you need to stop or reduce your credit card spending. Increased spending will not only increase your monthly payments (higher balances = higher minimum payments), but you could also lower your credit score if your balances get closer to the credit card limit.
Depositing cash deposits is frowned upon as it is difficult to document. How does a subscriber know where the money is coming from? If you have money to deposit, talk to your loan officer first. To be sure, anything over $200 that is not part of your normal monthly income should be mentioned to your loan officer.
In addition to the impact on your credit scores, lenders may include payments you co-signed for when calculating your debt-to-income ratio (DTI). A high DTI can make it harder to get a loan or line of credit.
This weekly sponsored column is written by Fountain Mortgage. Located in Prairie Village, Fountain Mortgage is dedicated to educating, and therefore empowering, clients to make the best possible financial decision for their situation. Contact Fontaine today.
Mike Miles NMLS ID: 265927; Fountain Mortgage NMLS: 1138268