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Things To Avoid When Applying for a Mortgage Loan

By
Real Estate Agent with Keller Williams Realty

As I was putting my buyer's package together, I decided to include a list of things buyers should NOT do when getting ready to buy a house.  Here are the major things I have:

1. Do not change your job, become self-employed, or even worse, quit your job. This makes you look less financially stable and could hurt your chances of getting a loan.

2. Do not buy a car or any other big items. This could significantly shift your debt-to-income ratio and cause you to lose the promised mortgage.

3. Do not use your credit card excessively. Since your credit report is what is used to verify your credit worthiness, don't abuse your cards while applying for a mortgage loan.   

4. Do not fall behind your payments. This is not a time to lower your credit score with missed payments. All financial institutions you approach will be watching your payment habits carefully.

5. Do not "forget" to put all your debts on the loan application. Make sure you remember to include even small debts on your application. Any "errors" will raise a red flag and you may be denied a loan.

6. Do not make large deposits into your account without consulting your accountant or loan officer. The lender will wonder where did the money come from. Did you  accumulate the cash on your own, or perhaps received a check from your family because you're living beyond your means?

7. Do not co-sign a loan for anyone, including your family members, even if they beg you. When you co-sign a loan, you are signing a legal contract that holds you responsible for the entire debt. If the borrower does not repay the loan, a collection agency will try to collect from you. Your credit score will suffer.

8. Don't run a credit report on yourself!  This will show as an inquiry on your lender's credit report. Your mortgage lender will probably ask you to explain the inquiry in writing.

What else would you advise your buyer NOT to do when applying for a mortgage loan?

Posted by

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If you are searching for your dream home, thinking of selling your current house, looking for a great investment, or have other real estate needs, please call me at (703) 399-6894. Visit my website to find out why Arlington, Virginia, is a great place to live.  

Elizabeth Byrne, Realtor®, MBA
Specializing in Arlington County Virginia Real Estate
Keller Williams Realty, 2101 Wilson Blvd, Arlington, VA 22201
      Cell: 703-399-6894      Email: Liz@ArlingtonWorld.com

Arlington Real Estate

Comments (6)

Vickie Nagy
Coldwell Banker Residential Real Estate - Palm Springs, CA
Vickie Jean the Palm Springs Condo Queen

Another good idea is to have the downpayment funds wired into escrow. It makes it easier to clear funding conditions.

Mar 26, 2011 04:02 AM
Elizabeth Byrne
Keller Williams Realty - Arlington, VA
Arlington Virginia Real Estate

Vickie, thank you for your suggestion. I will include it in my list.

Mar 26, 2011 04:11 AM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hi Elizabeth,  Great post, I am amaze when people say, "oh I co-sign on a load for a friend".  Hope you have a great weekend!

Mar 26, 2011 04:17 AM
Virginia Gingras
West USA Revelation - Gilbert, AZ

These are great suggestions.  They are so logical and yet missed so many times.

Mar 26, 2011 04:18 AM
Lynn B. Friedman CRS Atlanta, GA 404-617-6375
Atlanta Homes ODAT Realty - Love our Great City - Love our Clients! Buckhead - Midtown - Westside - Atlanta, GA
Concierge Service for Our Atlanta Sellers & Buyers

Dear Elizabeth,

You know I am a great fan of "teaching" posts!  You do them so well.  Thanks for the list!

This will be especially important as soon as the new rules about REVERIFICATION of Buyer's financials begin and the rates for loan insurance go up in April 2011.

@Vickie Nagy, (BMC Real Estate in Blackhawk CA) in the Metro Atlanta market - "downpayment funds wired into escrow" is the only way now.  Too many fake "bank" checks.

 

Have a happy day -
Lynn

Mar 26, 2011 04:31 AM
Lloyd Binen
Certified Realty Services - Saratoga, CA
Silicon Valley Realtor since 1976; 408-373-4411

Hello Elizabeth,

It's a good idea to include those items in a buyer's package.  Some buyer's get so happy and excited after their purchase offer is accepted they run out and purchase a car.  Of course the car requires a loan. oops.  I've seen it happen.

Take care.

 

Mar 26, 2011 06:17 AM