by Nutan Brown
on Friday, October 7th, 2022 at 12:48pm.
Applying for a mortgage is one of the first steps in buying a new home. To make the mortgage application process flow as smoothly as possible, there are a few things you should avoid before, during, and after applying for your mortgage. Here are 3 things to avoid when applying for a mortgage.
Making Large Purchases
You may be excited to buy some furniture for your future home, or maybe a car to go in your new driveway, but doing this can cause problems during the mortgage process. Financing these large purchases increases your debt and thus your debt-to-income ratio, which is a main factor that mortgage lenders consider during the application process. Changes in your debt-to-income ratio, even after you have been pre-approved for a mortgage can delay or even stop the closing on your new home.
Applying For New Lines Of Credit
Every time you apply for a new line of credit, your credit score is impacted and your average credit age is affected. If you apply for new lines of credit right before, during, or after you have applied for a mortgage, it could affect your eligibility for the mortgage or raise your interest rate significantly. If you are planning to use a financing option for any large purchase, wait to apply for it until you’ve closed on your new home.
Co-Signing A Loan
You may want to help a friend or family member who is making a big purchase by co-signing a loan, but this can be dangerous if they fail to make payments. Even though you may not be the one making the payments, you're ultimately responsible for them doing so. If you feel the need to co-sign for a loan, wait until you've closed on your home just to be safe.