From Approval to Keys in Loudoun County: What NOT to Do After Mortgage Approval
Avoid Making Large Purchases
It’s understandable to feel the urge to start furnishing your new home or perhaps even splurging on a new car to park in the driveway. However, making large purchases using credit (or even large sums of cash you withdraw from your account), such as buying furniture, appliances, or a vehicle, can jeopardize your mortgage approval. Even though you may have been approved for a certain loan amount, any additional debt could impact your debt-to-income ratio and potentially lead to a denial or delay in closing.
Steer Clear of New Credit Applications
Once you’ve been approved for a mortgage, it’s crucial to maintain the status quo with your credit profile. Avoid applying for new credit cards, store cards, or any other type of credit, as each application generates a hard inquiry on your credit report. These inquiries can temporarily lower your credit score, which may affect your mortgage terms or even result in a denial of the loan.
Stay Current on Existing Payments
Your credit score plays a significant role in the mortgage approval process, and late payments can have a detrimental effect on your creditworthiness. Make sure to stay current on all existing payments, including credit cards, loans, and utilities. Late payments, even if they occur after mortgage approval, can signal financial instability to lenders and may raise red flags.
Avoid Opening or Closing Accounts
In the period between mortgage approval and closing, it’s essential to maintain stability in your financial accounts. Refrain from opening or closing bank accounts, as these actions can complicate the verification process for your lender. Similarly, avoid depositing large sums of cash into your accounts without a clear paper trail, as this may raise concerns about the source of funds.
Steer Clear of Cosigning
While it may seem like a gesture of goodwill to cosign a loan for a family member or friend, it’s a risky move, especially after mortgage approval. Cosigning for a loan creates a legal obligation for you to repay the debt if the primary borrower defaults. Additionally, cosigning can impact your credit score and debt-to-income ratio, potentially affecting your ability to qualify for the mortgage or secure favorable terms.
Discuss Major Life Changes with Your Lender
Beyond the financial aspects, it’s important to communicate with your lender about any significant life changes that may occur between mortgage approval and closing. Events such as getting married, having a child or adopting, or other major life changes can impact your financial situation and may require adjustments to your mortgage paperwork. By keeping your lender informed, you can ensure that your mortgage remains on track and avoid any potential complications.
As you navigate the final stages of the homebuying process in Loudoun County, it’s essential to exercise caution and avoid any actions that could jeopardize your mortgage approval. By following these guidelines and staying financially responsible, you’ll soon be turning the key to your new home with confidence and peace of mind.
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Following these steps, you can increase the value of your property ahead of a home sale, without breaking the bank. Why not start making improvements today! Your home will thank you for it. In the meantime, if you are thinking about selling your home or have any questions, please don’t hesitate to contact us. We’re always happy to hear from you.