While writing yesterday’s article, “Your Credit and Buying a Home,” we were speaking with Michael Kingsbury of Academy Mortgage about some of the ins and outs of credit during the home loan process. Michael provided us with a list of “dos and don’ts” that Academy Mortgage provides their clients when they apply for a home loan and we thought it would be a good list to share. These tips are for after you’ve started the loan process and will help you avoid any hiccups during the time it takes you to close on your new home. The do not list is especially important as these somewhat simple and innocuous items can derail a home loan, even if the buyer didn’t realize that what they were doing would affect the loan process.
Home Loan DOs
- DO continue making your mortgage or rent payments on time.
- DO stay current on all of your existing accounts.
- DO keep working at your current employer.
- DO keep your same insurance company.
- DO continue living at your current residence.
- DO continue to use your credit as normal.
- DO call your lender if you have any questions.
Home Loan DON’Ts
- DO NOT make any employment or income changes.
- DO NOT make any major purchases (car, boat, jewelry, etc.).
- DO NOT apply for new credit (even if you are pre-approved).
- DO NOT open any new credit cards (store cards included).
- DO NOT transfer any balances from one account to another.
- DO NOT pay charged off balances without discussing with your lender.
- DO NOT pay collections accounts without discussing with your lender.
- DO NOT buy any furniture.
- DO NOT close any credit accounts.
- DO NOT change bank accounts or switch banks.
- DO NOT max out or go over your limit on any credit card accounts.
- DO NOT consolidate your debt onto one or two credit cards.
- DO NOT take out a new loan.
- DO NOT start any home improvement projects.
- DO NOT finance any elective medical procedures.
- DO NOT open a new cell phone account.
- DO NOT join a new fitness club.
- DO NOT pay off any loans or credit cards without discussing with your lender.
If you have any doubt about a purchase or adjustment to your life that may affect your credit, talk to your lender before you take action. Even small changes in your credit score or debt to income ratios could have drastic effects on your ability to acquire your new home loan. There are plenty of real estate horror stories that involve home buyers buying a new flat screen TV before closing on their home and finding themselves suddenly turned down for their loan. Lenders check credit several times during the home loan process…one of those checks occurs days before closing and finding out then that you are suddenly not qualified for the loan will scrap months worth of work and find you without a house. Don’t make that mistake!
image courtesy of Philip Taylor PT