To approve the mortgage loan, your credit history, assets and debts will all be thoroughly analyzed by the mortgage lender. But even if your loan application is approved, the mortgage lender is not done with you yet. Your finances will be analyzed and reviewed all over again before you seal the deal, and the house becomes yours.
Opening a new credit, for example, can hurt your overall credit score and disqualify you for your loan by increasing your overall debt beyond the maximum allowed by your lender. Closing an account can also wreak havoc, as well as making a large deposit or withdrawal. It is recommended that borrowers have some money saved in their account, to demonstrate financial stability.
“Overall, you want to keep your financial household in order and stable while you are going through a mortgage application and closing process,” says Rutger van Faassen, vice president of consumer lending at Informa Financial Intelligence, a Boston-based financial products and services company. “Anything that creates uncertainty for the lender will weigh on their underwriting decision and anything that looks out of order will raise questions.”
If your loan application is rejected after the additional review, you might be able to recover the deposit you’ve made on the house, conditioned that the purchase contract included a loan contingency. However, you will not get back the money for the appraisal, application fees and professional representation will still have to be paid by you.
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