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For those who are planning to buy a house in the United States, loans may be an inevitable problem. However, whether the loan can be successfully obtained is the key. Buying a house is a complicated matter. In order to ensure a smooth purchase of a house, loans are the most important and critical issue. Today, let's share with you 15 tips on loans in the United States. It is recommended to save them and avoid detours when applying for a home loan!
1. Don’t Borrow a Large Amount From Your Credit Card While Applying for a Loan
Not only will it increase your debt ratio, it will also lower your credit score and cause your originally approved loan application to be rejected.
2. Don’t Quit Your Job While Applying for a Loan
Even if you sign the final document, if the lending bank uses your income as a condition for loan review, you must still be employed by the original company when the lending bank releases the loan. Be aware that the lending bank will call your employer again to confirm before releasing the loan.
3. Don’t Change Jobs While Applying for a Loan
Even if your new job pays the same or more than your previous one, it can still complicate your mortgage deal. Some lenders won’t finance you until 30 days after you start your new job, which can delay your closing and potentially cost you money in penalties that extend the time it takes to lock in your rate.
4. Don’t Change Your Salary While Applying for a Loan
If you reduce your work hours or lower your base salary in exchange for higher commissions or bonuses, the lender will only calculate the lower base salary, because commissions or bonuses must have a two-year history to be considered. In addition, if you switch from a W2 employee to an independent contractor, even if it is the same job and the income is higher than before, the lender will consider that you have no base salary. Because contractors are considered self-employed, they need to have two years of tax return income before their income can be counted.
5. Don’t Buy a New Car While Applying for a Loan
Even if the lender already has your credit report, they will usually update your credit report again before lending money to check if you have any new debts and recalculate your debt ratio to determine if you still meet the loan standards. If you buy a car with cash, they will confirm whether you have enough cash to complete the purchase transaction. In addition, the car dealer's credit check may also cause your credit score to drop. If your new credit score is lower than the lender's requirements, your loan application will be rejected.
6. Don’t Rush to Buy New Appliances Before You Finally Get Your Loan
(such as refrigerators, washing machines, dryers), furniture or other high-priced items (such as new engagement rings, wedding dresses, watches, etc.).
7. Don’t Forget to Pay Your Bills on Time
Recent late payments can have a significant negative impact on your credit score.
8. Don’t Think You Can Rest Easy Once You’ve Set Up an Automatic Payment System
Be sure to check your bank account and make sure your bills are paid on time to avoid late payments. It happens! A late payment within a year can seriously reduce your ability to buy a home or refinance.
9. Don’t Transfer Money Between Your Asset Accounts Frequently
Whether transferring money from a cash account to a savings account or from a stock account to a cash account, you need to explain the reason and provide transfer records.
10. Don’t Deposit Large Sums of Money Other Than Your Salary
This is especially important if you cannot (or are unable to) provide a source of funds for a large deposit (such as a large cash deposit). Lenders will require a full explanation and paper trail for any "large" deposits in order to identify suspected money launderers. What is "large"? Depending on the lender, many consider anything over 25% of monthly income to be large and require explanation.
11. Don't Mail Your Tax Return
If you buy a property or refinance around the tax filing deadline, you should file electronically. Lenders may require the IRS to provide you with your tax transcript for the current year before lending, and postal mailing will delay the processing of the tax transcript.
12. Don’t Run Another Loan Transaction at the Same Time
If you are also applying for a Home Equity Line loan for your home, or buying a rental property or vacation property, the lender will want to know all the details of the new property (principal, interest, taxes, insurance, market rent, etc.) to determine if you still qualify for the loan. They may even insist that you complete all other transactions before they offer you a loan. If you apply for multiple loans on the same property, your loan will be stopped until you cancel the other loan applications.
13. If You Want to Refinance, Don’t Sell the House You’re Going to Use as Collateral
Most lenders will not lend on a listed home.
14. If Your Credit Score is on the Edge of Meeting Loan Criteria, Do Not Use More Than 10% of Your Credit Card Limit.
Failure to do so will damage your credit rating and may disqualify you from a loan, or increase your loan interest rate.
15. When Refinancing, Don’t Take on a Large Renovation Project at the Same Time
Lenders won’t lend you money until your renovation project is complete. Why? They’re worried about construction liens, and if your home goes into foreclosure, they won’t be able to sell the property with the renovations still in progress.
