In the past, we have written many articles on best practices, when it comes to qualifying for a home loan. We have also discussed what things not to do, when applying for a home loan, yet we continue to see these issues pop up from time to time.
So, if you are thinking of getting a home loan soon or anytime in the future, see our list below of what things not to do.
Of course, it makes sense to always speak to a licensed lender like Strategic Mortgage, because everyone’s situation is unique and many of the problems below are fixable, given the right time frame.
Here is an updated list of things not to do when applying for a home loan.
Applying For A Home Loan – Don’t Do These Things
Don’t: - Make large deposits into any financial accounts that cannot be sourced, such as a large cash deposit
– Lenders will analyze all deposits into your most recent 2 months’ bank and financial account statements.
Don’t: - Obtain any new large debts
- It is best to avoid taking out a new large debt (such as that sports car you have been eyeing), just before applying for a home loan.
Don’t: - Changing your line of work or quit your job altogether
- Lenders want to see steady and consistent employment in the same line of work. So, if you are offered a better job opportunity, in the same line of work you are in, by all means take it. However, you don’t want to switch from say a W-2 salaried job to a 1099’d commissioned job or change career fields, just before applying for a home loan.
Don’t: - Co-sign on someone else’s debts
– Often times, someone will think they are doing the right thing, by offering to co-sign for perhaps a family members debt. But if the account is less than 12 months old, when you apply for a home mortgage, you often times can not exclude the debt, even if the other party is paying the debt.
Don’t: - Keep high balances, percentage wise, on your existing credit accounts
– If you have credit cards and are applying for a home loan, the percentage of used credit matters. You always want your ending statement balances of credit cards to show at 40% or less of your available credit. In other words, if you have a credit card with a $10,000 limit and are applying for a loan soon, you never want a statement to close, with a balance of over $4,000 on it. If you use a card to put all of your expenses on monthly, then I recommend paying down the balance to below 40% of the limit, before the statement period closes. That one trick, can make a big impact on your credit score and financing cost.
Don’t: - Miss any payments
- It’s a given, but missing payments is recipe to lower your credit score and not be approved for a loan.
Don’t: - Over draft your bank account
– Lenders will sometimes view this the same way as missing a payment.
Unfortunately, these things do sometimes occur and it doesn’t mean that you would not be approved for a home loan. However, it’s important to make notes of all of these items, before applying for a home loan, as avoiding these items, will increase your chance of your loan being approved and also increase your chances for more favorable terms on your new home loan.
As always, to qualify for a new home loan, it is best to sit down with a licensed mortgage lender, such as Strategic Mortgage and be properly pre-qualify for a new home loan.
For more information on current home loan programs and options for existing and potential home owners, please contact Bill Kamboukos of Strategic Mortgage at (480) 219-3682 or by emailing: firstname.lastname@example.org or online at www.strategicmtgaz.com
Vasilios Kamboukos – NMLS#160440