October 30, 2017
Orion’s experienced brokers remind their clients that being approved for a mortgage does not constitute a done deal, whether it is a purchase or a refinance. That means that once you have received a "yes," you still have to be careful. A broker will be helping you and will continue to monitor your credit and your general financial well-being. Until you own the home, avoid doing the things that can bring things to a halt.
Good brokers tell their clients, “Don't make a big purchase.” If you take out a loan for another major purchase (car, RV, whatever), you change your debt to income ratio substantially. Paying cash won't prevent a mortgage snafu, either, because of the sudden hit to your bank account, and we don't want you to be short on cash after making a down payment. Even if the purchase isn't enough to prompt any lender to deny your mortgage, it could lead to higher borrowing costs.
Our brokers also say, “Don’t change your job status by quitting or being fired.” The amount of income you have coming in is one of the key factors considered when determining whether you qualify for a loan. Even if you have an offer for a better job and would simply be trading one income stream for another one, it's always best to ask your broker before making a move.
Don’t open a credit card. Another factor in whether you qualify for a loan to buy a home is how much credit you have available to you. In addition, opening a credit card requires a credit check. That can lower your credit score, which any lender monitors through your closing.
Don’t make any major money moves. In addition to your pay stubs, Orion, and pretty much every other lender, will ask for bank statements. Even if the money is to your benefit, it will have to be explained. You would have to prove the money was earned and not a loan of any type. Any non-paycheck income should be declared and explained, as should any expenditure that's outside the norm.
Lastly, our brokers tell clients, “Don’t get ahead of yourself.” Even a small store credit card should not be opened. The most important thing is closing the loan, and then owning your house. All other financial moves can and should wait.