Mortgage Rate News

Many people who are looking to buy a home are under the mistaken impression that once they receive their mortgage approval, they are free and clear as far as financing goes. Unfortunately, this is not the case. Even with approval, your mortgage financing can still fall through before closing.

One of the main culprits? Additional debt built up after your mortgage approval.

Mortgage approval

You know that when you go through mortgage approval, your credit report and score are checked. These items are used by mortgage lenders to determine whether you will get the mortgage financing, as well as the terms that will be available to you.

But mortgage approval isn’t the final say in financing. Some mortgage lenders check your credit report again, a couple of weeks before the closing date. This means that if you run up more credit card debt, or if you get another consumer loan, like an auto loan, it will likely show up. And if it does, it could scuttle your mortgage financing.

Mortgage lenders want to make sure that your financial picture isn’t changing as the financing goes through. They want to make sure that you aren’t getting into a situation that will preclude you from making mortgage payments. If your credit report shows an increase in activity after getting mortgage approval, it raises a red flag. You want to keep your finances as close to the same as when you were approved as possible.

If you have gone through mortgage approval already, remember that it doesn’t mean your financing is a sure thing. Avoid adding more debt to you finances after an mortgage approval. Don’t even apply for more credit until after you have closed on your home.

Tags: mortgage lenders, mortgage financing, home mortgage blog, home loan,
mortgage approval, credit report, check credit score