Here is a list of six common mistakes that people do when getting a home loan. None of these rules are written in stone, but it is best to avoid them.
1 – Do not make major purchases like furniture, appliances, jewelry, vehicles or vacations.
What they really mean by this, is do not get in debt. Many times new home buyers will go out and purchase new things like furniture for their new home.
What they do not realize is that while they are in the process of obtaining the home loan the lender will place them under a credit monitoring system that will give the lender alerts if the buyer should acquire new debt.
2 – Don’t change or quit your job.
This one sounds simple enough, but it is all too common for people to switch jobs in the middle of doing their loan.
This will require the whole loan to be re-evaluated by the lender and can delay the whole process by several weeks.
3 – Consult with your mortgage professional before withdrawing, depositing or moving large amounts of money in or out of your bank account.
All deposits made into your account have to be documented to the lender. This is especially true for large ones.
For this reason, all large deposits should be avoided, especially if they are cash deposit.
4 – Do not pay off debts or collections (unless instructed to do so by a mortgage professional).
As a rule of thumb you should always pay your debts on time, but if you have collections showing on your credit report, paying them might actually make it worse.
The reason is old collections have a way coming back to life when you pay them off. Always ask your mortgage broker before proceeding with a payment.
Let sleeping dogs lie.
5 – Avoid using cash for a good faith deposit – cash is difficult to verify and could result in a closing delay
This is a big one. Never, ever use cash or money orders. Get the information for the Escrow company and wire the funds from your bank account to the escrow company.
Do keep in mind that the funds have to come from your account. There are exceptions to the rule if in doubt ask your mortgage professional.
6 – Don’t have your credit report pulled too many times – this can hurt your score.
When a company pulls your credit, not only does your credit score drop but an inquiry shows on your credit.
A credit report with many inquiries looks to the lender as a person that is desperately trying to get in debt.
If you want to see your credit report without it affecting your credit report, you can get your Free Annual Credit Report from here. This is the page for the official free yearly credit report.
Needless to say, this does not look good.