Mortgage Don’ts

Don’t do these things before you apply for a loan

• Miss payments – A history of on-time payments is one the largest factors in determining your credit score.  The more recent they are the more they count against you.
• Make large cash deposits – Any deposits that show up on your bank statements will have to be “sourced” and it is difficult to source a cash deposit.  Deposit any cash you plan to use at least three months before you apply for a loan.
• Payoff old collection accounts – This can actually lower your credit score.  Your loan officer will tell you if old collections will need to be paid.
• Run up balances on your credit accounts – Having cards that are maxed out will lower your credit score.
• Co-sign a loan – A loan you have co-signed will count against your debt-to-income ratio even if you are not the one making the payment.
• Switch to a job with self-employment or commission income – It can take up to two years before self employment or commission income can be counted as stable income.

Don’t do these while you are applying for a loan or after you have been approved

• Make large purchases – A new payment or reduction in reserve funds may mean you no longer qualify for a loan.
• Open new credit accounts – Any new credit inquiries will have to be explained.  New debt obligations may mean you no longer qualify.
• Switch banks – Your down payment and closing costs will need to come from an account that has been documented.
• Change jobs – Your new employment status and income will have to be verified
• Use gift funds if the gift giver does not want to provide personal information – Gift funds have to be documented just like personal funds.  The only way to use gift funds without documentation is for them to be deposited at least three months before application
• Hide anything from your loan officer – The underwriting process is very thorough.  We can’t help you though it if we don’t have the whole story.  Any attempt at deception can torpedo your loan.