5 Don’ts when Applying for a Mortgage
October 15th, 2015
October 15th, 2015
Congratulations! You’re ready to buy a home. While you may be aware of everything you need to DO before you apply for a mortgage, some borrowers are not aware of what they SHOULDN’T DO before and during the mortgage application process.
Here are 5 potentially costly mistakes that home buyers may make when applying for a home mortgage. If you make any of these mistakes, you could lose the opportunity to buy the home of your dreams.
1. Don’t change jobs, become self-employed or quit your job!
While it may seem like a good idea to change jobs, especially if you’re going to make more money, it could delay your application process. If you’re transferring to a new community with the same employer, you should be ok. However, you may need to be on the job for a couple of pay periods. So check with your lender first. If you’re relocating to new area, changing jobs and buying a home, you should probably plan to have an ample down payment and a plenty of savings in the bank. But if you quit your job without another job, become self-employed or make a career change, you may not be able to get a loan.
2. Don’t buy a vehicle!
When you buy a car, truck or SUV, you increase your debt-to-earnings ratio – how much you owe monthly on debts compared to your pre-tax earnings. Even if you can afford to take on a new vehicle payment and a new home payment, you could fall below the lender’s debt-to-earnings credit standards if you purchase a vehicle. So wait until after your mortgage closes to look into buying a new vehicle.
3. Don’t use your credit cards too much and don’t let your payments fall behind!
During the mortgage application process, you should keep your credit card balance under 30% of the credit card limit. Anything more than that can cause your credit score to drop. Plus, you should make all of your payments on time. Even being late once can bring your credit score down.
4. Don’t spend any money you’ve saved for closing!
If you spend money you’ve set aside for closing, you may not have time to re-save it before you go to closing. And if you don’t have the money for closing, you will lose the loan.
5. Don’t exclude any debts or liabilities on your loan application!
When you knowingly omit any debts or liabilities from your loan application, you’re committing mortgage fraud. And if you get caught, you could be put in prison for up to 30 years. If you have a question about whether you should include or exclude a debt, ask the lender.
If you’re buying a new home and need a mortgage loan, contact the mortgage specialists at Grandview Lending. We can answer all of your questions and walk you step-by-step through the mortgage loan application process, so it will go more smoothly. Give us a call at 317-255-0062 today!
Photo credit: 123RF / Gorkem Demir
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