At UICCU, our goal is to get you the right home loan. We work with our members to help improve their financial lives, not burden them with excessive debt. That’s why we have lending guidelines to ensure that you can afford your new home. We don’t charge prepayment penalties or the typical 1% origination fee unlike many other financial institutions. We even mail you a personalized loan review six months after closing to show you how to save thousands in interest expense over the life of your home loan.
We work closely with you during the loan process to not only educate you, but answer any questions or concerns you may have. For example, did you know there are mistakes to avoid from the time you submit an application to closing? Many borrowers don’t, but these mistakes can delay or prevent your home loan from closing. Let’s review some common mistakes to avoid from the time you submit your application to your loan closing:
- Don’t make any large purchases like a new car or furniture. When you take on new debt, this will lower your FICO score and increase your debt to income ratio. This can sometimes make borrowers who qualified for a loan initially, no longer eligible.
- Don’t deposit large amounts of cash into your bank accounts. During underwriting, copies of your bank statements will be submitted. If there are large cash deposits, they will need to be explained. Small, explainable deposits are fine, but getting $10,000 from your parents as a gift in cash, for instance, is not.
- Don’t co-sign other loans for anyone. When you co-sign for a loan, you are financially obligated to repay that debt. Even if you will not be making the payments, we are required to consider the payment in your monthly budget. This will affect your debit to income ratio and may disqualify you for a mortgage loan.
- Don’t change bank accounts. Your bank statements will be submitted to underwriting as proof of your assets. It is considerably easier if there is consistency in your account records. Even if you plan to transfer money between accounts, talk to your lender first to make sure it won’t affect your home loan.
- Don’t apply for new credit. Every time you have your credit report run (whether it’s for a mortgage loan, auto loan, credit card, furniture, etc), your FICO score will decrease. A lower credit score may affect your eligibility for approval and can determine your interest rate this and future loans.
- Don’t close any credit accounts. Many borrowers have erroneously believed that having less available credit makes them less risky and more approvable, but that is not correct. A major component of your score is the length and depth of your credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both those factors of your credit score.
Contact one of our experienced loan officers to discuss the right home loan for you.