So You've Been Pre-Approved For Your Home Loan....What Next?
Being pre-approved for your home loan is great however you're not in the clear yet; there are certain overlooked actions which will cause your lender to withdraw your pre-approval, leaving you high and dry!
The good news is: these mistakes can be easily avoided as long as you're aware of them.
Check out these 8 overlooked pre-approval killers which often catch soon-to-be new home owners off guard in the quest for a new home:
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8 Home Loan Pre-Approval Killers To Watch Out For
If you’ve recently been pre-approved for a mortgage you’re likely feeling pretty good about yourself - pre-approval is the first hurdle in successfully buying a new home!
Don’t let your guard down just yet.
To maintain your pre-approval status and keep your lender happy, you’ll need to stay on top of your finances to ensure everything runs smoothly.
Take note of, and avoid the following mortgage pre-approval killers which are often overlooked by would-be borrowers as they get excited about shopping for a new home:
1. Applying For A New Credit Card Or Closing Old Credit Accounts
A stable credit score is the aim during this period, and applying for a new credit card (or closing an existing account) will send your credit score into dance mode! Leave your credit situation as it is for now.
2. Making a Big Purchase (with credit OR cash)
This mistake catches plenty of would-be homeowners off guard. Avoid large purchases, such as:
- New cars;
- Holiday tickets, and;
- furnishings for you soon-to-be new home.
Making large purchases on credit will affect your debt-to-income ratio, and reduce your asset level if using cash. Delay that gratification!
3. Changing Jobs
Even if a new career offers better pay - changes to your employment situation means the lender will need to reassess your financial situation, and you’ll need at least 2 payslips for evidence.
As tempting as it may sound, quitting your job to become self employed will on delay things further. Typical employment probationary period won’t help your situation either. Put up with your current job a little longer!
4. Falling Behind On Bill Payments
Keeping on top of your bills (rent, utilities, internet etc) is more important now than it’s ever been - missing a payment will leave a negative mark on your credit report and will drag down your credit score. Direct debit is your friend!
5. Paying Off Existing Debt
Realise that debt is an asset - as long as you can effectively manage it. Avoid putting yourself under financial strain by attempting to pay off all of your debt. Showing the bank that you can manage your debt keeps the bank happy.
6. Losing Track Of Deposits
Other than your usual paycheques, any income you receive after being pre approved must be documented and sent to your lender so they know exactly where it’s coming from. If you’re receiving gift funds, make sure you have a gift letter from the donor. Keep a paper trail of everything!
7. Co-Signing New Loans
Avoid co-signing any new loans for friends or family members (e.g. car, school or personal loans) once pre approved. If the borrower falls behind on repayments, your credit score suffers, not just theirs. Ouch.
8. Ignoring Lender Requests
If your lender requests any further documentation after pre-approval be sure to provide it to them as soon as possible. Pre approval does NOT mean you’re immune yet, so don’t get lazy!
You’re not alone: remember that your mortgage broker is part of your team, so if you’re uncertain about any decisions during the loan process don’t be afraid to ask for advice - It could be the difference between having your loan approved quickly and securing the house of your dreams before someone else does!