What are things to avoid in the mortgage application process?
Buying a new home is an exciting time for the home buyer and their family. The home buying process is also not an easy task. The thought of applying for a mortgage, getting insurance quotes, decorating the new home, and changing schools for children as well as making new friends can be overwhelming. The toughest and most stressful part in buying a new home is probably the mortgage application process. Just because you are approved for a mortgage loan does not guarantee that the mortgage loan will close. There are many things that can potentially go wrong to delay your home closing due to simple mistakes.
In this article, we will discuss things to avoid in the mortgage application process.
What NOT to do during Mortgage Application Process
Things to avoid in the mortgage application process include applying for new credit cards. Remember that credit scores are extremely important when it comes to a mortgage approval. If you got preapproved for a mortgage loan, one of the conditions for that preapproval was because you qualified due to your credit score. If you apply for new credit such as credit cards, autos, or funiture/appliance store credit cards, the hard pull credit inquiry will drop your scores. This can affect your mortgage loan approval due to the drop of your credit scores and can possibly turn into a mortgage loan denial.
Other things to avoid during the mortgage application process
Other things to avoid in the mortgage application process is not to charge up your credit cards. Most home buyers are excited about decorating their new home and go nuts in charging up new furniture and appliances. Having high balances on your credit cards will lower your credit scores and will increase your debt to income ratio. For those mortgage loan borrowers who have high debt to income ratios, having a higher credit card balances will definitely affect their credit scores and increase their debt to income ratio. If you are on the borderline debt to income ratio, this higher credit card balance can trigger a mortgage loan denial. This includes not making any purchases in general, whether it is on credit or cash.
Do not purchase high ticket items on credit during the mortgage application process
Other things to avoid in the mortgage application process is never to purchase a high ticket item such as an automobile. A new car payment will definitely affect your debt to income ratio and I have witnessed dozens of cases where a mortgage loan borrower got their mortgage loan denied due to the new car payment. Never, never, never finance a new car when you are or intend to apply for a mortgage loan. It is probably one of the most important things to avoid in the mortgage application process.
Do not quit or change jobs during the mortgage application process
Other important things to avoid in the mortgage application process is not to quit your job. I just had this happen to one of my fellow loan officers where his client just quit her job prior to closing their loan. The mortgage loan was immediately suspended and the closing got delayed indefinitely. If you are thinking of changing employment and want to close on your mortgage loan, you cannot be thinking of changing jobs weeks before your closing. On this case, the client got another job she will be starting next week but unfortunately need to wait 30 days until she can provide recent pay check stubs.
Pay your bills on time during mortgage application process
The most important things to avoid in the mortgage application process is never to be late with any monthly payments. One late reported to a credit reporting agency will drop you credit scores by at least 30 points or more and you can guarantee that your mortgage loan to get denied.
If you have any questions please contact me at 262-716-8151 or email me at email@example.com or visit me at www.gustancho.com . I am a mortgage banker with no lender overlays.
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