Davidson Realty, Inc.

Bank of England’s Troy Silhan Provides Major Dont’s When Securing A Home Loan

April 20, 2016

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Posted by in News

There is certainly no shortage of advice for prospective homeowners on how to secure a home loan. Pay bills on time, save for a down payment, and so on.

Equally important, however, are the things you should NOT do before and during the loan process. Bank of England Production Manager and resident mortgage expert Troy Silhan provides great tips for avoiding problems while obtaining a loan.

DON’T apply for a credit card or auto loan, or co-sign a loan. Troy says, “When a lender pulls your credit, it can lower your score if you have it pulled multiple times. If you open new credit cards, purchase a car or co-sign for something, this can increase your debt-to-income ratio, which is one of the three determining factors when we approve a mortgage loan.” In essence, if this ratio goes up, the amount of house you can afford goes down.

DON’T close any existing lines of credit. Troy warns that closing revolving lines of credit (including credit cards) can actually lower your credit score. He mentions, “Part of your credit score is based on the length of time you have owned a particular credit card, and you benefit from that the longer you have the card. When you close the account, you lose the history associated with the account and your score can drop.”

DON’T spend funds marked for closing. Troy cuts to the chase on this one. He says, “This one is a big deal. If you saved up the money for the down payment and closing cost, you must have that money available at closing. If you begin to purchase the furniture for the house, hire moving people, hire home services like lawn care, and buy a bunch of stuff with cash for the home you do not own, that can prevent you from getting the home loan.” The bottom line? Simply avoid touching those closing funds until you leave the closing table.

DON’T schedule any services until the closing date has been confirmed. It’s a mistake to schedule any service whether turning on the electricity or scheduling hardwood floor installation until the closing date has been confirmed by both the lender and the title company. Troy advises, “Don’t jinx yourself and order services until you are cleared to close through underwriting.”

DON’T change your name. After major life shifts like a marriage or divorce, it can be tempting to immediately change your surname, but it may be best to wait. As Troy says, “If you applied for a mortgage as Ms. Jones, then became Mrs. Smith, there is additional paperwork and things to do to make sure you are, in fact, one in the same person.”

Additional no-no’s include borrowing money to close for funds for your earnest money/binder, depositing large amounts of cash into your bank account, missing credit card payments (or worse, maxing out your card), disputing accounts or changing jobs/employers.

Learn more about starting the loan process by contacting Troy Silhan at (904) 217-9489 or TSilhan@boejax.com.

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