Finding a lender is probably the most important step in the home buying process. Shopping for a house knowing that you have been pre-approved for a certain amount gives both the buyer and seller a sense of security. Unfortunately, some new homebuyers do not realize that getting pre-approved for a mortgage loan does not guarantee that the bank will pay the seller at closing. Making certain financial choices after being prequalified can drastically decrease your chances of having your loan funded. Knowing what not to do after qualifying for a mortgage loan can help a homebuyer avoid a pre-closing financial disaster.
Quit or Change Jobs
No matter how you feel about your job, managers, or coworkers, do not quit your current job and acquire a new one. During your mortgage application, your prospective lender used your employment history to qualify you for the loan. Even if your income does not change, getting a new job could affect your lender’s faith in your ability to repay the loan. There are times when obtaining a job with a higher salary or transferring to a new position at the same company will not affect your pre-approval, but it is always best to tread carefully and avoid making any decisions that could cost you the home of your dreams.
Open New Credit Accounts
Acquiring new debt is the last thing you want to do while purchasing a house. Lenders perform a second credit check before approving your loan, meaning they will see any newly opened accounts. If the lender sees one new inquiry, closing will probably go smoothly, but if they see a new line of credit, things could get complicated. Lenders may question your reason for getting more debt and wonder if borrowed money is being used to purchase the home. The new line of credit may also damage the buyer’s credit score, leading to a higher interest rate.
Make Large Financial Transactions
During the home buying process, lenders will scrutinize every financial decision that the potential borrower is making. Anytime money is moved in large quantities, the lender will want an explanation. Avoiding certain large transactions such as paying off a debt, using a large amount of saved money to purchase a vehicle or appliances, and any money movement that will deplete cash reserves. Waiting until the property purchase is final before making any transactions is the best way to ensure a loan is funded.
Get Additional Help
There are times when situations outside of anyone’s control affect a potential homebuyers credit at a crucial moment. When this happens, a real estate attorney can work with you to find a way for your client to close. The legal team at Adam Law Group will review the situation and existing contract to help delay settlement while working with the buyer to do what is necessary to secure a mortgage. We can also help you resolve issues caused by contract cancellations and transaction related disputes caused by a settlement delay. Contact our conveniently located Jacksonville, Florida location today to schedule a consultation so that we can begin discussing your needs.