Don’t Hurt Your Chances of Getting a Mortgage

Obtaining a mortgage is an exciting time for home buyers. However, there are many actions that borrowers should be aware of to be sure their mortgage process goes as smooth as possible. Below is a list of actions that all borrowers should avoid when applying for a mortgage.

  • Avoid major purchases: Making large new payments will only increase your debts and can cause a loan to fail. It is important to wait till after closing on a mortgage to pursue new purchases such as cars and furniture.
  • Don’t be sitting with cash: Be sure all funds are in bank accounts where they can be tracked. For funds to be used for a down payment or closing costs the funds must be sourced or seasoned in a bank account. Cash that has not been in a bank account for the required amount of time, usually at least 2 months, will not be able to be put towards any mortgage costs.
  • Avoid making large deposits: Every large deposit in a bank account must have a source of where it came from and “under the mattress” is not a sufficient explanation.
  • Avoid Changing jobs: Changing jobs during the loan process is not recommended unless the new job will yield higher pay. In which case, the borrower must produce an increase in pay document.
  • Don’t miss loan payments: Missing any loan payments during the process of obtaining a mortgage can hurt one’s chances at obtaining a mortgage. It’s best to stay on time with all loan and rent payments.
  • Be careful when consolidating debt: Many borrowers think that paying off collection accounts will improve their credit score; however, this often has an adverse effect. Paying off collection accounts can cause them to become “active;” which means the account will now be considered in the credit score calculation, causing the score to decrease. Consult with your mortgage professional before paying off any accounts.
  • Don’t open new credit accounts: Opening new credit accounts during the mortgage process can be detrimental to obtaining a mortgage. This can cause the debt to income ratio to increase out of an acceptable range. Loan officers may advise a borrower to open a “secured” credit card in hopes to raise a credit score; but before doing so always consult your mortgage expert.
  • Don’t close credit accounts: Similar to the above point, during the mortgage process a borrower would not want to close any credit accounts. Closing credit accounts can cause a borrower’s credit score to decrease because they are removing credit history.

Obtaining a mortgage is a very tedious process where underwriters take a close look at all the borrower’s information to deem if the borrower qualifies for the loan. Therefore, it is crucial to keep the above steps in mind and always consult your mortgage loan officer before making any decisions that can alter your credit.

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    The Kewin Team

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