Are you getting ready to apply for a mortgage to buy a home? Before you summit your paperwork, there are a few things that you should keep in mind. For example, you shouldn't withdraw large sums of cash from your bank account. In order to assess risk, your lender will need to source your money. Cash isn’t easily traceable, but your bank account is. If you have to withdraw cash, let your lender know. They'll discuss the proper way to document your transactions so you don't look bad on your mortgage application. Continue reading for some more tips.
Tips When Applying for Home Loans
One of the first things your lender and agent will tell you is to not make any large purchases when trying to buy a house. When assessing the risk of giving you a home loan, lenders will be looking at your debt-to-income ration. In other words, they'll be looking at how much money you have versus how much you owe to other organizations. Making a large purchase, like buying new furniture, a car, or a new home appliance, will affect your ratio. So, if you're applying for a home loan, you might just have to wait to make any large purchases until after the process is complete.
Another thing you shouldn't do is switch bank accounts. As I stated earlier, lenders need to source and track your money. When your accounts are switched they are harder to keep track of. If you have to switch your accounts for what ever reason, speak with your loan officer first. Another thing you'll want to keep consistent is your credit score. Therefore, you'll want to avoid things like getting a new credit card or applying for a separate type of loan like a car loan. Lower credit scores can determine your mortgage interest rate and possibly even your eligibility for approval, so this one is very important.