7 Don'ts After You Apply For A Mortgage

"Common sense" is not always "common practice".  This is especially true when people are in the process of buying a home and do things that hurt or actually prevent them from buying   their dream home.

Below are the 7 actions that a home buyer should not do.

1. Buy home on your own.   The  commission for a Realtor® is paid by the seller or new home builder.  Why not utilize the expertise of a well established Realtor to find your dream home and to negotiate the sales price and terms.
   
2. Unexplained large cash deposits.  Lenders need to show your source of funds.  Sudden deposits of $5,000 or more in cash into your  bank account will cause your Lender to ask where the money came from.  Usually, funds deposited into your bank account that was 60+ days previous will not require an explanation as most Lenders ask for the 2 most recent bank statements.
   
3. Do not make any large purchases such as for a car or new furniture or a vacation.  This causes new debt and that will hurt your qualification for your home loan.
   
4. Do not co-sign a loan for another person.  When you co-sign, you are legally responsible for that debt if the  debt is not paid.  Lenders will count the payments against your income even though you do not make the payments.
   
5. Do not change banks or bank accounts.  Lenders need to track the source of funds and that is made very difficult if you change banks or bank accounts.  Also, a Lender may become suspicious as to the reason for the change.
   
6. Do not close any credit accounts.  My wife and I paid off several credit cards and we thought it was prudent to cancel the credit accounts as we thought less credit accounts the higher our credit score.   This was wrong.   Credit scoring companies take into consideration how long you have had the credit account, payment history and amount of credit outstanding compared to credit limit.  By closing out 3 long time credit accounts we actually hurt our credit score.
   
7. Do not apply for any new credit.  Credit inquires leave a record and multiple credit inquires will negatively impact your credit (FICO) score.  Do not do it.   Wait until after you have moved into your new home and then apply for new credit.  Also the lower your credit score the more expensive or higher APR you will pay on your new mortgage.

Tobin Seven, REALTOR® / Veteran is Agent with REMAX.   Website: www.SoldBySeven.com, phone 703 327-6800