2020, can you believe it? Twenty short years ago Y2K was looming on the horizon. People were worried that everything would collapse when the computers changed to the new century. Nothing actually fell apart and life as we know it continued.
It seems like there is always a reason to worry and put off making big decisions. However, not making a decision to move forward is actually a decision to keep things as they are.
Those who purchased a home in 1999 are 2/3 of the way through their
mortgage, with very low payments and tens of thousands in equity.
There is still land available. Interest rates remain low. Building materials and labor costs will continue to rise. Decide to take advantage of these circumstances in 2020. Don’t procrastinate. Come see me!
Congratulations! You’ve found a home to buy and have applied for financing! Before you make any big purchases, move money around, or make any big-time life changes, consult your loan officer. They will be able to tell you how your decision will impact your home loan.
With that, here are the seven PREVENTABLE mistakes when getting financing for your home.
1. Don’t change jobs, quit your job, or change the way you are paid! Your loan officer must be able to track the source and amount of your annual income. If possible, you’ll want to avoid changing from salary to commission or becoming self-employed during this time as well. Getting a raise, well, that is always acceptable. 2. Don’t deposit cash into your bank accounts. Lenders need to source your money and cash is not really traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer. 3. Don’t make any large purchases like a new car or new furniture for your new home. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher debt to income ratios… higher ratios make for riskier loans… and sometimes qualified borrowers no longer qualify. 4. Don’t co-sign other loans for anyone. When you co-sign, you are obligated. As we mentioned, with that obligation comes higher ratios as well. Even if you’re not the person making the payments, the payment will count against you. 5. Don’t change bank accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is consistency among your accounts. Before you even transfer money between accounts, talk to your loan officer. 6. Don’t apply for new credit. It doesn’t matter whether it’s a new credit card or a new car. When your credit report is run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO score will be affected. Lower credit scores can determine your interest rate and your eligibility for approval. 7. Don’t close any credit accounts. Many clients have believed that having less available credit makes them less risky and more likely to be approved. A major component of your score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both those determinants of your score. Finally, any impact on assets or credit should be reviewed and executed in a way that ensures your loan will be funded. Fully disclose your plans with your loan officer before making any financial decisions during the process, they will be happy to guide you. For more information on financing, visit our preferred lender, 1st Security Bank HERE.