First-Time Home Buyer: Common Mistakes That May Affect Your Loan Approval
The time that you are shopping for a home is a sensitive time. Lenders don't want to see any major changes to your debt-to-income ratio, credit score, or flow of income. Be sure to avoid these common mistakes when you are shopping for a home, so that your transaction goes smoothly!
1. Financing a new car.
Financing a new car can significantly impact your debt-to-income ratio - and the lender definitely does not want to see that. Financing a car prior to buying a home will affect the loan amount that the lender will approve you for. If you absolutely wish to buy a car, wait to make this big purchase until after escrow has closed.
2. Opening or closing lines of credit.
Opening or closing lines of credit will take a hit on your credit score. Avoid doing this when your loan is still under review. You don't want your credit score to change from the time that you start the loan process to the time your loan closes.
3. Changing your job.
The lender wants to see that your job and income are stable. Avoid switching jobs during this time because it may raise questions to the lender.
4. Depositing a large sum of cash into your bank account.
Any large sums of cash should be deposited into your bank months before applying for mortgage. The lender will require to see 2 months' of bank statements, so a large deposit of cash into your bank account during that time will raise questions on their end.