With all the extra housing inventory available, it’s a great time for someone looking to invest in real estate to buy a home. We all know, though, that it’s becoming tougher to obtain a mortgage these days. Mortgage brokers and banks want solid credit scores and higher down payments. So if you are making an application for a mortgage, here’s a list of what you want to be aware of during this typical 45-day period to make sure the mortgage goes through.
1. Now is not the time to make any big purchases. That includes high-ticket items such as cars, appliances, TVs, and furniture for your new home. A lot of people don’t realize that when you make your purchase, you’re creating more debt for yourself (if you’re charging the item rather than paying cash) and becoming a bigger liability for the bank. So it’s been known that the mortgage can be pulled in this instance. Wait until after you sign the closing papers to make the next purchase.
2. It’s not a good time to switch jobs. When applying for a loan, the lender looks to make sure you have job stability and knows what type of salary and/or bonuses and commissions you receive. If you switch jobs in the midst of the application, they’re going to have a hard time verifying salary information, which could affect your loan. Again, wait until after you sign the closing papers to make any career moves.
3. There could be multiple credit checks. The lender obviously checks your credit at the loan application before they decide if they can pre-approve you. However, now lenders are often going back to check credit scores again right before closing. So know that you want to continue making all your payments. Avoid applying for a new credit card or making a big purchase. Any upset to your score could affect your mortgage.
4. Have money ready for closing costs. Don’t take every last penny you have to use toward a down payment. Closing costs could cost you an additional 3% out of pocket. You’ll want to check in with your lender within a few days of closing to get a rough estimate of the amount you’ll need to bring to closing. It’ll most likely have to be in the form of a cashier’s check made out to yourself. Your lender can give you the exact information.
These tips will help keep the mortgage application going without any hiccups. Of course, if you have questions or problems along the way, be sure to contact your lender. They will be able to guide you through the process and give you other tips to make sure there are no problems prior to closing.
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