HELP! Why is my Mortgage Loan Being Denied,  Along with 2 out of 3 Others in Today's Market???

Having trouble getting your mortgage loan approved in today's tumultuous credit climate? Don't worry, you're in good company, or is that bad company?

Reminds me of a story relayed to me by a lender friend recently. A potential client arrived at my office to apply for a new mortgage loan as a first time home buyer. During the initial interview, he announced that he had "A+ credit." He knew this because he had never been late, and every credit card company in the country wanted to give him a card. What he, and most consumers, don't know is there are many factors other than late payments that affect credit scores.

When his credit report was pulled, it was discovered that he was absolutely correct. He had never been late, and every credit card company in the country wanted to extend him credit. Unfortunately, he had accepted nearly all of the offers. He had 22 open accounts and all of the smaller accounts were maxed out. His credit score was 525, and the loan he was hoping to get was out of the question, or was it?

My friends' story brings up the misconceptions buyers have regarding the condition of their present creditworthiness.  When you are planning to purchase a new home in the near future there are certain measures you want to avoid to get yourself to the starting gate in good stead!

BAD MOVES KILL THE RACE, Here are Just a Few

•·         Don't apply for any new credit of any kind! Whenever you apply for any ‘pre-approved' credit card invites you are inviting them to pull your credit, which will reduce your credit score potentially up to 20 points for one hard inquiry, OUCH!

•·         Avoid raising any RED FLAGS that will create activity on your credit report such as: co-signing for a loan, adding any new accounts, or even changing your name with any of the credit bureaus, this includes disputing anything on your credit report! Now is not the time!! Sending a letter of dispute to any credit reporting agency creates a notation on your credit report, which when noticed by the loan underwriter, can cause your loan to be delayed until the note is removed and new credit scores are pulled! OMG, no!

•·         Despite your good intentions, don't  pay off any collections or charge offs that have lurked in the shadows of your credit history. This will only cause your credit score to be decreased because the date of the last activity on your report has now been updated to recent activity. Let these old dogs lie until at least your closing, when it's possible to pay these old accounts off through escrow!

•·         The average borrow thinks if they consolidate their debt, they will minimize their payoff obligations, which in theory sounds like a logical and fiscally sound idea, however, when you consolidate all of your debt into one or two cards, that card then appears to be maxed out, and you will be rewarded by your credit score being lowered by 50 -100 points, bad start!

 Some things should go without saying, but to summarize the best way to see your loan CLOSE  and not get denied is to pay your credit accounts when due--one 30 day late payment can cost you anywhere from 50 - 100 points, and can take months, if not years to get you back in good stead, OUCH!                                                     

And don't forget to keep your Mortgage and Real Estate professionals in the loop! If you have questions regarding what will be the best actions for you to take to put yourself out there as a front runner in the loan approval race, CONTACT THEM BEFORE you make your move, so they can supply you with the resources that you need to cross the finish line in good time!