One of the most stressful elements of the home buying process is obtaining financing for a home loan. Lending restrictions have gotten much tighter over the past few years, and this has made it more difficult for those in the Columbus, OH area to become homeowners. Despite the fact that prices on the properties themselves have been low and affordable, if you can’t get the loan that you need, you can’t make an offer on a home. This has presented a bit of a conundrum for our Buyer-Clients, and as an Exclusive Buyer’s Agent in the Columbus area, I have found it exceedingly important to give those that I work with every bit of advice that I can about successfully obtaining a mortgage loan so they can proceed with their home search.
While lending restrictions are gradually loosening, there are still a number of things that you need to do in order to be successful when applying for a mortgage loan. Here are a few things to avoid right after applying in order to ensure a speedy and stress-free loan process:
Don’t deposit large amounts of cash into your bank account. Your lender needs to be able to source and track all of your money as they review your application. Cash is not really traceable. Small deposits that are easily explained are okay, however large cash gifts and their source are not. If you need to deposit a large sum, contact your loan officer and discuss the best way to document it.
Avoid large purchases. Buying things such as a new car or new furniture, however needed they may be, is not wise after applying for a loan. Additional monthly debt payments will take away from your potential mortgage payment. This can take you from being a qualified borrower to a risky one. Prioritize what needs to be purchased and hold off on other large items until after your closing.
Don’t co-sign any additional loans. You are obligated when you put your signature on a loan for someone else, and with that comes higher debt ratios. You become a riskier borrower. Even if you won’t be the one making the monthly payments on that loan, your lender WILL count it against you.
Refrain from changing bank accounts. Remember, your lender needs to be able to easily track all of your assets before you’re approved. In order for this to be done both accurately and quickly, your accounts need to be consistent, and changing bank accounts can complicate things. Even transferring money between accounts can get confusing. Talk to your lender before making decisions about where to place your money.
Don’t apply for new credit. When you have a credit report that has multiple financial channels on it, your FICO score will be affected. Lower credit scores will determine your interest rate and alter your eligibility for approval. Applying for new credit, whether it is for a car or a new new credit card, will affect your score, and that can potentially alter your eligibility for a loan.
Try not to close any credit accounts. There’s a common myth out there that having less available credit for review will make you a less risky borrower, thus bettering your chances for approval. This is inaccurate. A major component of your credit score is length and depth of history. Your total usage of credit is also a factor. Closing a credit account will actually negatively impact your score, as you are negating some of that history that you have built.
Avoiding these common errors after applying for a mortgage on your Columbus, OH home will certainly help the home buyer process move much faster. Obtaining a loan can be a stressful part of the transaction, however if you know which behaviors to avoid and which documents you need for the application, then everything will go much more smoothly. If you have any questions about buying a home on the Columbus, OH real estate market, don’t hesitate to contact me. I’d be happy to help you in any way that I can and put you in touch with some lenders in the Columbus area. I hope to hear from you soon!