Do's and Don'ts When Applying for a Mortgage

When you are ready to buy or refinance your home, you want to make sure that you're setting yourself up for success and not hindering your chances of getting the mortgage you need. Some actions can greatly improve your chances of approval and better terms, while others can put you at risk of losing the whole deal. Here, we outline some of the Do's and Don’ts when you are applying for a mortgage and why they are important.

Do's

You'll want to make sure you're keeping a steady-as-she-goes approach with your life, work, and finances while you're in the process of getting a mortgage. This shows lenders that you are a safe, trustworthy bet.

• Obtain pre-approval - Having an idea of how much money you have to work with when you start looking at houses gives you more flexibility and confidence when it is time to make an offer. Many realtors require pre-approval before they even begin showing you houses.
• Continue to make your mortgage payments on time, if any - Even though you're trying to make changes, you're still responsible for the mortgage you already have.
• Stay current on all existing accounts - Making late or past-due payments on your existing accounts is a red flag to lenders and can hurt your chances of getting a mortgage
• Continue to work for the same employer - This shows a good, consistent work history and makes you look like a safer bet to lenders
• Continue to use your credit cards as usual - Don't make any major purchases, open, or close your credit cards.
• Contact your Loan Consultant with any questions - They are trusted experts who can get you the right information every time. Don't rely on social media, family, or friends for exact answers. If you're worried about something or don't understand it, ask your Loan Consultant.

Don'ts

• Move money around without first contacting your Loan Consultant - This is a big one. Your lender is going to want you to account for every cent and moving money around makes this process confusing. If you need to move something, ask you Loan Consultant how you should do it.
• Make any major purchases - While it is tempting to start buying furnishings and appliances for your new home, don't. This can affect your debt-to-income ratio and make it way more difficult to qualify. Same goes for purchasing vehicles, boats, etc.
• Pay bills late - When you don't pay your bills on time, it sends a red flag to lenders that you may also not pay your mortgage on time. Do whatever it takes to keep the on-time payments coming.
• Apply for new credit or open new accounts - Again, this will affect your debt-to-icome ratio and could ding your credit score as well. Best to put these types of decisions off until your mortgage is funded.
• Close any credit card accounts - Even if you aren't using them, keep them open. Part of your credit history includes the length of your credit accounts being open. Having accounts that have been open for a long time tells lenders that you are responsible, as another financial institution has had such a long relationship with you.
• Change banks or open new bank accounts - Changing banks or opening new accounts can make it harder to piece together your financial puzzle. Remember that mortgage lenders need to have all your finances accounted for, so making these changes makes it even more difficult.
• Max out or overcharge your credit accounts - Again, this will affect your debt-to-income ratio, as well as your credit score, which could reduce your chances of being approved or qualified for a better rate.
• Take out a new auto loan or lease - New wheels in your new garage might seem really tempting but try to put it off until your deal goes through.
• Make large cash deposits - Mortgage lenders are going to want to know where large or irregular deposits are coming from. Avoid making large cash deposits so that they don't have to be tracked down.

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