What NOT To Do When Applying for a Mortgage
Applying for a home loan is stressful. There’s no doubt about it, and worrying about approval or rejection isn’t a good time for anyone. Here are a few tips to get you on the right track when you’re applying for a mortgage.
While it’s good to have lines of credit to build your credit score, it doesn’t impress mortgage companies when your report is full of maxed-out credit cards. Carrying a small balance is usually ideal in these situations, but your lender should be able to provide you some useful advice regarding what to do credit-wise, to increase the limit of your loan.
Mortgage companies like to see steady patterns. Having the same job for a respectable span of time is a factor which is generally pretty important. If you’re about to apply for a home loan, it would be unwise to change jobs. Even if the new job seems like a better paying one, banks are interested in an applicant’s job security. Unless you’re already wealthy on your own terms, it’s best to stay put at your job while looking for a home loan.
Having a significant amount of debt is going to add to the challenge of being approved for any sort of home loan. A good deal of unpaid debt gives banks the impression that you are not the best at managing your money. Take a look at your credit report at least six months before you plan to apply for a mortgage, and start paying off some of the debts which have a negative note on your report.
Applying for Another Line of Credit
Doing anything which might impact your credit score negatively is ill-advised. If you have a decent credit score, don’t take a few points away by applying for another line of credit. Even if the new line is a small loan, it isn’t a good idea when you’re applying for something as major as a mortgage. Wait a while before making any significant purchases, those which require credit, until after you’ve been secure in your new home.
Late on Bills
Much like the point about having significant debt in your report, allowing your bills to go into late or delinquent statuses isn’t going to look good when applying for a loan. If you aren’t paying those bills on time, who’s to say that you’re going to pay your mortgage on time? Before applying, catch up on some of those late bills and develop a budget to stick to; a plan which ensures you’ll remember to pay your debts.
Be extremely careful with your finances when preparing to make a serious decision about a mortgage. Show the lenders that you know what you’re doing, that you’re responsible, and mindful of your financial future.
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