If you are planning to purchase a home in the near future, there are specific mistakes that you should avoid as they can hinder your loan options. Below are Austin 5 common credit mistakes.
Austin 5 Common Credit Mistakes
Lenders review the percentage of your debt to your earnings. Increasing debt either on your credit cards or with new loans can significantly shift that ratio. Generally, the higher your debt, the lower your mortgage qualification. This is even more critical after you have identified a property and have started the loan process. Lenders will re-check your credit report immediately before settlement to confirm that your figures has not significantly changed. If you acquired new debts, this can cause problems with the final approval.
As part of the approval process, mortgage companies look at your past and current earnings to evaluate your ability to pay back the loan. A consistent history in earnings is essential. Moving jobs prior to or during the loan process may cause issues with qualifying for a loan, especially if the new job is in a different line of work or at a lower rate of pay. During the loan process, it may also lead to delays while the new employment is verified.
Loan processors generally analyze your bank account statements over the last several months. Transferring money to a different account may cause problems. It is best to leave funds in the same place until the closing is done.
Many types of mortgages require that you use a specific percentage of personal money for the down payment and/or settlement fees. Banks confirm this by analyzing bank statements. Any cash deposits are closely scrutinized. You may be asked to verify the source of those transactions.
Shutting Down Accounts
While getting ready to buy a property, you may decide to pay off credit cards. Prior to doing this, think about speaking with a mortgage professional on whether it is required based on your financial figures. If you do pay off bills, do not close the accounts as this may impact your credit rating. It is better to keep the accounts open without a balance.
Additional Advice on Austin 5 Common Credit Mistakes
The above Austin 5 common credit mistakes includes only the most common mistakes. As a local real estate consultant, I can provide you with a list of local lenders in the Austin area. You may reach me, Shaina Moats, at Keller Williams Realty via phone at 512-963-7157 or email at email@example.com.