If you are planning to buy a property in the near future, there are specific things that you should avoid doing as they can affect your mortgage options. Below are MA credit mistakes to avoid.

MA Credit Mistakes To Avoid

Large Expenses

Lenders evaluate your debt to income ratio. Making large purchases on either your credit cards or n the form of new loans might significantly alter that ratio. In general, the higher your debt, the lower your loan qualification. This is especially critical after you have under agreement to purchase a home. Mortgage companies will re-check your credit report shortly prior to closing to verify that things have not changed. If you incurred new debts, this can lead to you not being able to buy the property.

Switching Jobs

As part of the mortgage process, lenders review your previous and present employment to assess your ability to pay back the loan. Consistency in earnings is very important. Moving employment prior to or during the loan step can create issues with qualifying for a loan, particularly if the new job is in a separate line of work or at a lower salary. During the mortgage process, it will also lead to delays while the new employment is verified.

Switching Banks

Mortgage underwriters usually evaluate your bank account statements over the last few months. Moving funds to a different institution can lead to issues. It is recommended that you keep funds in the existing account until after the closing.

Cash Transactions

Many types of loans mandate that you use a certain amount of personal money for the down payment and/or settlement costs. Mortgage companies confirm this by reviewing bank statements. Any cash transactions are closely analyzed. You may be asked to verify the source of cash transactions.

Closing Accounts

While getting ready to purchase a property, you may try to pay down credit cards. Prior to doing this, think about consulting with a loan professional on whether it is needed based on your financial situation. If you do pay off debts, do not close the accounts as this may affect your credit score. It may be better to keep the accounts open without a balance.

More Information on MA Credit Mistakes To Avoid

The above MA credit mistakes to avoid covers only the most common mistakes. Contact Peter DaMore with Law Offices of Peter T. DaMore Jr. at 781-229-7900 or pdamore@ptdlaw.com for additional information on this and other related topics.