Local Mortgage Experts

Finding a great home loan involves careful consideration of your needs, finances and history. We are here to guide you.

5 Things you Should NOT do Before Applying for a Mortgage

denied mortgageIt is very easy to focus on what you should be doing to prepare yourself for a mortgage, but what about the things you should avoid before applying for a mortgage? The following list illustrates 5 things you should not do before applying for a mortgage.

 

1- Finance a new car.

It is not advisable to buy a new vehicle with credit or make any other large purchase on credit for that matter. Adding a large monthly obligation like this will affect your debt to income ratio and can either reduce the amount of mortgage your are qualified for or even make you ineligible for a mortgage loan.

2- Change your employment

Lenders like to see stable employment history on a mortgage loan application. Changing your employer, especially if you are changing your career field can hamper your chances of getting approved for a loan. Additionally changing your employer can also cause you to need to gather more documentation for you lender during the mortgage loan process.

3- Change banks.

Similarly to employment history, your lender analyzes your banking history as well. They usually collect a certain amount of bank statements and look at your transaction history. They want to assure that you have a positive banking experience with limited or no overdrafts of insufficient funds.

4- Transfer large amounts of funds

Lenders review your banking history within the last couple of months to assure there were no large deposits made.  A large deposit could be a red flag of a possible new loan that was deposited into your account but is too new to reflect on your credit report or a possible gift for downpayment from a family member. If lenders do find a recent large deposit they will need to source where the funds came from and make sure that your loan application is still within guidelines.

5- Co-sign on a loan for anyone

When you are preparing to apply for a mortgage, you should not cosign on a loan for anyone. Regardless of whether or not you make the monthly payments you are obligated to that payment if the other borrower does not pay. Lenders will include this monthly obligation into your debt to income ratio and it can affect the amount of mortgage you are qualified for.

 

The next time you are preparing yourself for a mortgage keep in mind the things that aren’t advisable to do before applying for a loan. Some of these items can require extra documentation, reduce the amount of mortgage you are qualified for, or even hurt your chances of being approved for a mortgage at all.


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