Things To Avoid During Mortgage Loan Process
Tips On Things To Avoid During Mortgage Loan Process:
It is human nature for a home buyer to get super excited when buying a new home and to be thinking of ideas in decorating their new home during the mortgage application loan process. However, during the mortgage application process, a mortgage loan borrower needs to be walking on egg shells when it comes to their credit and finances and there are things to avoid during mortgage loan process.
What Things To Avoid During Mortgage Loan Process?
When a mortgage loan borrower completes their 1003 mortgage application, the mortgage broker/lender/underwriter pulls a credit check and grants a mortgage pre approval from the credit report that was pulled. Any negative changes to the mortgage loan borrower credit report and credit scores can be a cause for a mortgage loan denial. Any new credit inquiries will definitely cause a drop in credit scores and so will charging large ticket items such as appliances and new furniture. A large purchase on a credit card will increase the credit debt and increase the minimum credit payment thus causing a drop in credit scores and a higher debt to income ratio due to the increase minimum monthly payment.
Avoid New Credit Top Thing To Avoid During Mortgage Loan Process
A mortgage loan borrower should never apply for new credit of any kind are things to avoid during the mortgage process. Never pay off a collection account or charge off account unless told to do so by the mortgage lender. Paying off an old negative debt will reactivate that account and will cause your credit scores to drop.
Don’t Close Credit Accounts Are Things To Avoid During Mortgage Loan Process!
Never close active credit card accounts. Closing out a credit card account that you do not use will definitely drop your credit scores. Also, never max out your current credit cards. This will also cause your credit scores to drop. Always maintain a 25% or less of balance on all of your credit accounts.
Don’t Co-Sign for Others!
Never cosign for anyone during the mortgage application process. Cosigning will hurt your credit scores for two reasons. The first is the credit inquiry, hard pull of your credit report, and second, you are taking on more debt. Do not dispute negative information on your credit report even though you have proof that the negative information is not yours. This will halt the mortgage application process. Also, do not enroll in any credit monitoring services as well. The less activity there is on your credit profile the better it is. Any activities on your credit during the mortgage application process will alert the underwriter as a red flag and will scrutinize your mortgage application process and letters of explanations will be require which might delay you home loan closing.
Not Being Late Are Things To Avoid During Mortgage Loan Process
Never be late on any monthly debt obligations. One late payment during the mortgage application process can potentially halt your home loan closing until there is a valid explanation.