” The Difference between a Successful Person and Others is not a Lack of Strength, not a Lack of Knowledge, but rather in a Lack of Will….Vince Lombardi

 

You are making that big decision to buy a home.  From now until you close,  you want to keep your credit clean when it comes to getting home financing.  Even if you have good credit, there are some things you do not want to do before applying for a loan.

1. Don’t change your job before applying for a home loan.  Along with that, now is not the right time to become self-employed or quit your job.  You want to show lenders stability, which means you’ll be less likely to default on the loan.

2. Don’t change banks.  Like your employment, you want your banking history to show stability.

3. Don’t buy a car or truck or any other form of transportation that you have to finance.  Buying one increases your debt to income ratio and that’s something loan officers don’t want to see.

4. Don’t buy furniture on credit before buying your home.  Like financing, a car, charging big ticket items increases your debt to ratio and now is not the time.

5. Don’t be late on your credit card payments or charge excessively.  You need a track record of responsibility and show that you can manage your money.

6. Don’t make large deposits into your bank account.  Lenders like the money that will be your down payment to be sitting in your account for at least two months.  What they call “seasoning”.

7. Don’t lie on your loan application.  Sounds simple, right?  But don’t leave out any debts ot liabilities you have.  It’s fraud.

8.  Don’t co-sign on a loan for anyone.  Even if you’re not the one making the payments on the loan, it increases your debt to ratio.

9. Don’t have inquiries made into your credit.  Looking for new credit translates into higher risk for lenders.  If your inquiries are related to your mortgage search, it usually doesn’t effect your credit score because the assumption is your rate shopping.  But opening credit accounts within a short period of time represents some risk and your credit could take a hit. 

10. Don’t spend your money for closing costs.  Part of the price of financing a loan is the closing costs and you’ll likely have some responsibility for paying them.  Spending that money could jeopardize the closing of your loan.

Most mortgage brokers and lenders are saying the changes banks and lenders have made go back thirty years.  A few years ago almost anyone could get a loan, now they have made changes to the extreme.  People are still getting loans it just is quite a bit harder.  So talk to your lender in advance to see what you need to do to make the process go smooth for you.