In our last blog post, we shared 5 things borrowers shouldn’t do before and during the mortgage application process. In this post, we share 5 MORE things you should avoid doing when applying for a home mortgage. If you make any of these 5 mistakes or any of the previous 5 mistakes, your mortgage company may question your ability to repay the loan and reject your application.

1.  Don’t buy furniture or appliances.

While it may seem like a good idea to buy any needed furniture or appliances for your new home before you move in, don’t do it. If you use your credit card for your purchases, the cost of these purchases will increase your card balance. And your new balance could affect your debt-to-income ratio, which could lower your maximum loan amount. And if you think you’ll just use cash to make the purchase, you’ll have less cash saved. And you may not have enough money to make your down payment. So wait until the loan closes before you buy any new furniture or appliances.

2. Don’t prompt any inquiries into your credit.

When lenders see new inquiries into your credit, they may assume you have or are getting ready to open a new credit account. Your lender may fear that you’ll make purchases up to your new credit limit, which may cause you to default on your loan. Additionally, each new inquiry takes points off of your credit score. Before your closing, your lender will have to verify each new inquiry, which means it could delay your closing. And if you do take on new credit, your debt-to-income ratio will be affected, which means you could lose your loan.

3. Don’t make any large deposits into your bank accounts.

Lenders prefer that the money for your down payment “seasons” or sits in your account for at least 2 months prior to closing. If you make any large deposits into your bank account, like bonus money, cash from a certificate of deposit or money that’s been given to you as a gift, you will need to provide your lender with documentation as to where this money came from.

4. Don’t change bank accounts. Your lender likes to see stability with your banking history. They will review your bank statements during the pre-approval process upfront and then again during the underwriting process. If you have any unusual deposits or withdrawals, your lender will require documentation for the movement of these funds.

5. Don’t co-sign any loans for anyone.

Any time you co-sign a loan, it affects your credit, because you’re assuming liability for the other person’s debt. If the other person were to stop making payments on the loan, you would be responsible for making the payments. Therefore, co-signed loans are included into your debt-to-income ratio calculations.

By following these guidelines, you won’t put any obstacles in your path before your closing day.

If you need a new mortgage loan, the mortgage specialists at Grandview Lending can help you. We will discuss your financial situation and find the right loan for you. Then we will walk you through the loan process, helping to ensure it goes as smoothly as possible, so you’ll be in your dream home as soon as possible. Give us a call at 317-255-0062 today for more information.

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