10 No-No’s When Applying for a Home Loan

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  1. Applying for a home loanDon’t change your job prior to closing ~ Lenders want stability so now is not the time to quit your job or become self -employed. Stable buyers are less likely to default on their loans & lenders like that.
  2. Don’t change banks ~ Keep the same bank, much like your employment you’ll want your banking history to show stability too.
  3. Don’t take out any new loans ~ Purchasing a vehicle or taking out any other form of loan, effects your Debt -to -Income ratio and can adversely affect your home loan application.
  4. Don’t charge large amounts to your credit card ~ Big-ticket items such as new furniture or kitchen appliances are tempting to purchase on credit. Charges like this increase your debt-to-income ratio & again will affect your loan application. Save these purchases till after the transaction has closed.
  5. Don’t make payments late ~ Keep a clean & consistent track record of timely payments, lenders like to see that you can manage money wisely.
  6. Don’t make large deposits into your bank accounts ~ Lenders like “Seasoned” monies so don’t make any large deposits without a good explanation and a papertrail. It’s best to have your down payment monies in your account for at least 2 months prior to loan application. The same goes for any closing costs you may incur.
  7. Don’t lie on your loan application ~ This sounds like a “NO BRAINER” right? You’d be surprised at how many people leave out some of their debts or liabilities or fudge on their income. Don’t do it, It’s fraud.
  8. Don’t co-sign a loan for anyone ~ I know it’s hard to say NO but Co-signing a loan increases your debt-to-income ratio, even if you’re not making the payments on this loan.
  9. Don’t apply for new credit cards ~ When your credit inquiries are related to your mortgage search, usually it doesn’t affect your credit score. Most lenders assume that you’re rate-shopping & they understand that, but opening credit accounts within a short period of time represents some risk, and your credit could take a hit. Although inquiries are probably not a big factor in calculating your ability to repay a loan, but why take a chance?
  10. Don’t spend money you’ll need for closing costs ~ When purchasing a home, part of the loan fees are closing costs, and you will have some responsibility for paying them. Be sure you’ve budgeted & saved for your portion.
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Janet 
SimonsI am passionate about Real Estate and eager to answer all of your real estate questions! Text or Call me at 360-880-2356 or email me directly to ask about Buying, Selling or Investing in today's Real Estate Market - serving Lewis County & Thurston County, WA.

Janet Simons | Certified Residential Specialist | Real Estate Broker
Mountain Valley Real Estate