Posted on: 12 January 2018Share
If you are planning to buy a home, you should start preparing for it long before you plan to start house or mortgage hunting. This is because your financial habits in the months or weeks leading up to the mortgage application will determine whether your mortgage is approved, and at which rates. The following are some suspicious habits that may make mortgage lenders wary of your application:
Switching jobs just before applying for a mortgage loan can make it difficult for you to qualify for the loan. This is because the mortgage lenders want to see you as stable in the job market, and changing jobs doesn't show that at all. A typical lender doesn't want to risk loaning out money to someone who can lose their job and default on their mortgage repayments, so keep your job until your mortgage is processed and approved.
Consolidating Your Debts
Many potential homebuyers think that consolidating their debts into one nice package is a good idea when they are getting ready to buy a house. Unfortunately, this is rarely true because the debt consolidation often incurs fees and interest rates that your lender may not look upon too kindly. Besides, debt consolidation won't improve your credit significantly so doing it is like risking a lot with the potential for marginal gains.
Making Large Cash Deposits to the Bank
A stable financial situation is one of the things lenders watch out for when processing mortgage applications. If you deposit large sums of money into your bank account, the lender will view it with suspicion; for example, they may think that you made the deposit because you wanted to shore up your cash deposits and appear as "moneyed." This is even truer if you don't have a paper trail for the money to prove its legitimacy. Something like moving your money from one account to another may not pose a problem as long as there is clear evidence for it.
Just like switching jobs just before applying for a mortgage is dangerous so is switching banks just before applying for the mortgage. The bank you have been dealing with for years have a trusted relationship with you. They understand your financial habits and know that even if your account experiences a temporary dip towards the end of the month, such an occurrences is normal and don't signal a financial difficulty. A new bank that doesn't have a relationship with you may not be so understanding.