You’ve been to see your broker about getting a pre-approval for a mortgage, and you have been pre-approved, what are the next steps that you should take? I will go over some very important information from when you get pre-approved, have an accepted offer, and up until the closing date of your home.
First and foremost, DON’T DO ANYTHING! I cannot stress enough how important it is to not make any financial changes, or do anything to negatively impact your credit. At this point, you really have to think of your credit like a baby, and that you need to take care of it, and nurture it. This is the most important step in securing your mortgage and a successful closing of your purchase.
Up until your home purchase has closed, it is important to not do anything that will impact your credit, or jeopardize your down payment. Car loan? This is a big NO - NO EXCEPTIONS. New credit card from BestBuy to save on appliances? Nope. Clothes shopping? Well, maybe. Do you need to dip into your down payment source or put it on your credit card? If you said yes, then don’t do it.
Make sure that any bills that are coming your way during this time are paid on time, and in full. It is important that you do not miss a single payment. Not even a cell phone bill. If you cannot make the full payment, at least make the minimum payment.
If you have the possibility, clear up some debt. The lower the debt, the better this will reflect on your credit. Keep in mind that anywhere around 30%-35% credit utilization is the best for boosting credit, but you want to be lowering your debt to make it easier for the lender to approve you because your lowering your Debt Servicing.
No applying for any kind of credit. Even a credit check that’s commonly known as a “hard hit” is a big NO because of the possibility of lowering your credit.
Anything that could possibly change your credit situation, or add more debt to your credit bureau is a no until you are into your new home. Otherwise, it could jeopardize your pre-approval, and not to mention the purchase of your home if you are at that stage.
If you are only pre-approved, what are you waiting for?! Time to go house shopping!
If you have any questions about anything, or you're questioning making a purchase, please give me a call first to discuss any possible impacts of your pre-approval or approval.