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10 Commandments when Applying for a Mortgage

Follow these 10 Helpful Tips of what NOT to do when applying for a mortgage to avoid any unnecessary pitfalls.

#1) Thou shalt NOT change jobs, become self-employed or quit your job.

If you change your job there is usually a certain amount of time that you would have to wait before you would be able to close. FHA, for instance, requires that you have been at your current job for 1 month prior to closing. If you quit your job before closing and the lender is using your income for qualifying, it may cause your loan to be denied.

#2) Thou shalt NOT co-sign a loan for anyone.

During the loan process, any changes to your credit report or status could negatively affect your ability to close your loan on time or at all. Co-signing any type of car loan, student loans, or other loans would result in inquiries into your credit and additional financial responsibilities.

#3) Thou shalt NOT buy a Vehicle (or you may be living in it)!

Applying for credit to purchase a vehicle will be recorded as an inquiry into your credit by credit bureaus. This may decrease your credit score or decrease the amount of money that you may qualify for when purchasing a home.

#4) Thou shall NOT use charge cards excessively or make late payments on ANY of your accounts.

Inquiries will be recorded by credit bureaus and could decrease your credit score. Balances on credit cards exceeding 35% will affect your debt to income ratio and could decrease your credit score. Late payments of any sort can decrease your credit score, increase your home loan interest rate, delay closing, or cause loan denial.

#5) Thou shalt NOT spend money you have set aside for closing.

Most conventional loans require 2 months of reserve money to be verified in your available financial accounts.

#6) Thou shalt NOT omit debts or liabilities from loan application.

Please be very honest and clear about ALL of your debts or liabilities early in the loan application process. Having the right information will allow your Mortgage Planner to provide you the best qualifying loan value.

#7) Thou shalt NOT buy furniture, appliances, or household items before closing.

Although many people are anxious to furnish their new home, during the loan process is NOT the right time.

#8) Thou shalt NOT originate any inquiries into your credit.

Inquiries into your credit may result in decreasing your credit score. As this applies to vehicles, furniture, appliances, and household items; it also applies to ANY credit checks.

#9) Thou shalt NOT make large deposits without first checking with your mortgage consultant.

Abnormal deposits or large deposits into checking, savings, or any financial account beyond normal payroll deposits must have money sources verified by Underwriting.

#10) Thou shalt NOT change bank statements.

Because the loan process requires a 2 month history of reserve funds, opening new financial accounts near a closing date may void the history. New bank accounts will not have the 2 month history available and cannot be used.

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