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?
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