If you are planning to purchase a home in the near future, there are particular mistakes that you must avoid as they may affect your loan options. The following are Waltham MA 5 common credit mistakes.
Waltham MA 5 Common Credit Mistakes
Mortgage companies evaluate your debt to income ratio. Making major purchases on either your credit cards or on new loans can dramatically shift that percentage. Usually, the more debt you incur, the less you can qualify for on a mortgage. This is especially important after you have submitted your formal loan application. Mortgage companies may re-check your credit report immediately prior to settlement to verify that your qualification has not significantly changed. If you built up new debts, this can result in you not being able to purchase the property.
As part of the mortgage process, lenders look at your previous and current earnings to evaluate your ability to pay back the loan. Consistency in employment is very important. Changing employment before or during the loan step may create problems with qualifying for a mortgage, particularly if the new employment is in a different field or leads to less income. During the mortgage process, it will also cause delays while the new employment is verified.
Mortgage processors usually evaluate your bank account history over the past several months. Transferring funds to a different account may cause issues. It is best to keep funds in the existing place until the closing completes.
Most types of loans mandate that you use a specific amount of your own funds for the down payment and/or closing fees. Banks verify this by reviewing bank statements. Any cash deposits are closely reviewed. You may be asked to verify the source of such deposits.
While preparing to purchase a home, you may decide to diligently pay off credit cards. Prior to starting this, think about consulting with a loan professional on whether this is necessary based on your financial figures. If you do pay off debts, do not close the accounts as this may affect your credit score. It may be best to leave the accounts up with no balance.
More Information on Waltham MA 5 Common Credit Mistakes
The above Waltham MA 5 common credit mistakes is just a few examples. As a local real estate broker, I can provide you with a list of local lenders in the Waltham MA area. You may reach us, Bradford and Darleen Pratt, at REMAX on the Charles.