It is a delicate process to prepare your life for financial evaluation in order to get approved for a mortgage. It’s wise to exercise caution until the home closing process is complete to avoid negative ramifications that may result in you losing your home.
If you refrain from making these mistakes, the loan process should go relatively smoothly from application to your first set of keys. Remember to stay in steady contact with your mortgage lender, and check in with him or her before you make any significant financial decisions.
Avoid unnecessary spending
Gas for your car, groceries and personal hygiene products are considered necessary spending that shouldn’t be avoided. For everything else, implement a self-imposed spending freeze. You want to maintain the most stable financial image possible, so buckle down and try to eradicate excessive spending on things like entertainment and clothing. The closing process for a home is often much more expensive than anticipated. You want to make sure you’re prepared.
Avoid big ticket items
This may seem like an obvious suggestion, but it is surprising how often big purchases change the nature of the closing process. Lenders usually require a certain cash reserve, as a form of security to cover any surprises during the drafting of the loan. Because a major reduction in assets could reduce the likelihood of final approval, avoid making big purchases such as a car or large appliances.
Alternatively, you should also avoid any large bank deposits as it may then be necessary to explain the source of such funds to your lender. Sudden large deposits alert lenders and underwriters to potentially shady money practices, or may hint at an unstable financial foundation that cannot be maintained to afford the home long term.
Avoid opening new credit
Under no circumstances should you open new credit lines until after you have closed on your new house. Conventional credit cards, lines of credit at your favorite home improvement store and car loans are guaranteed to change your debt-to-income ratio. If this critical number is changed too much, it can cause problems with your final approval and may even result in you losing the ability to purchase the property.
Avoid changing jobs
Although this is not technically considered spending, changing jobs will certainly make your lender uneasy. It gives the impression that your financial situation is not as healthy as you claim. Thus, avoid a job switch unless it is absolutely necessary. If your income decreases, your debt-to-income ratio will be negatively impacted as well. In the event an underwriter decides to recheck all your numbers just before closing day, this unpleasant surprise could cause you to lose your home.
If you are buying a new or resale home, consult with a real estate attorney before closing the deal. There are countless laws and regulations that must be observed and considered in such process. A Las Vegas real estate attorney can also guide you through the process of obtaining your home loan. With over 30 years of experience, Marc Simon can handle any complex real estate law matter. For more information about this Las Vegas lawyer contact 702.451.7077 or info@marcsimonlaw.com.
