Are you thinking about getting a new mortgage and want to know what you should avoid? In this video, I’m going to walk you through 10 things that you do not want to do when getting a mortgage. We’ll look at everything from your credit report to your bank account so you can successfully qualify for your new home loan.
Whether you’re taking out a new mortgage for a purchase or a refinance, there are things that you do not want to do—as these things could affect you from qualifying for your new home loan. I have personally done millions of dollars in mortgages and have encountered all these issues I’m going to share. While some of them might seem like common sense, I promise you people have done them all.
#1: Don’t Take Out New Credit
Number one, do not take out new credit. Anytime you have your credit report pulled, we are notified. Your credit is monitored throughout the entire mortgage process, so we know if you have your credit report pulled for any reason at all.
So if you go and take out a new car loan, student loan, or buy a new lawnmower, now you have to qualify for that mortgage carrying that new debt. This could keep you from qualifying.
#2: Don’t Change Your Job
Number two, do not change your job. I know this seems like common sense, but people actually do this. In some rare cases, it’s okay to change your job, but you need to talk to your mortgage advisor first. If you think about it, we’re using your income to qualify for the new loan.
If you change your job, you could be going from taking a salary position to a commission-only job and, all of a sudden, that’s income we cannot use for your new loan. So you need to make sure you’re talking with us before you accept that new position. Please do not change your job, quit your job, or turn in a notice of termination without talking to us. This applies whether you hate your job or hate your boss.
#3: Don’t Make Large Deposits In Your Bank Account
Number three, don’t make any large deposits into your bank account, especially cash deposits. Any large deposits into your bank account have to be sourced, and there is no way to source cash deposits. This means cash deposits are just a no-no.
Large deposits, again, need to be sourced—and we have to find out where the money came from and get copies of the checks. If it’s from a donor, we need to have two copies of their bank statements and prove that it’s gift funds. It’s just easiest and cleaner if we don’t have any large deposits into your bank accounts.
#4: Don’t Spend Money
Number four, do not spend money that you need for settlement. This is another common sense thing, but we’ve had people do this. You need your money to come to settlement on settlement day, so don’t lend that to somebody else. What if they don’t repay you on time?
#5L Don’t Transfer Money Between Bank Accounts
Number five, please do not transfer money from one bank account to another. Again, we have to source where all your money’s coming from. The more transfers you have from bank account to bank account, the more paperwork for you and us. So please, limit your transfers. It just makes the process that much smoother.
#6: Don’t Cosign For Anybody
Number six, do not cosign for anybody else. This goes back to not letting anybody or you using your credit see if you cosign for somebody else’s car or student loan, now all of a sudden, we have to qualify you carrying that new debt. So again, do not cosign for anybody else.
#7: Don’t Stop Paying Your Current Mortgage
Number seven, do not stop making your current mortgage payment or any other bills that you’re obligated to. This is especially true on a refinance. Just because you apply for a new mortgage does not mean you can stop paying your own mortgage.
Remember, we’re monitoring your credit. It will affect your credit score if you stop paying your bills, so make sure you continue paying all of your current obligations during the mortgage process.
#8: Don’t Close Your Credit Cards
Number eight, do not close any credit cards or increase or decrease any claims of credit during the mortgage process. Again, we’re monitoring your credit. If you close a bunch of credit cards, it could affect your credit score.
You don’t want to increase or decrease any lines of credit because, if we are doing a refinance and we are paying off that line of credit or subordinating, it could definitely affect your new loan. So again, please do not touch any of your credit, whether it’s closing it, increasing it, or decreasing it.
#9: Don’t Borrow Money
Number nine, please do not borrow money from anybody—even if it’s from a non-bank source like a family member—without speaking to us first. There are situations where you can borrow money from family, but we need to be looped in on this because there are certain mortgage rules that we have to abide by. Again, please make sure you’re talking to us before you’re borrowing money from anybody else.
#10: Don’t Pull On Your Home Equity
Finally, at number 10, do not pull on your home equity line of credit during the refinance process. We’re doing something with that line of credit, whether it’s paying it off or subordinating it, when it comes to your new loan. This means we cannot have you borrowing against it, as it’s going to affect your new mortgage. Again, please do not borrow against your home equity line of credit during the refinance process.
Ensuring A Smooth Mortgage Process
By not doing these 10 things, you can help ensure a smooth mortgage process. It’s never too early to get your financial house in line. Whether you’re looking to buy or refinance now, six months from now, or later into the future, buying a home can be extremely exciting. However, first and foremost, it’s an investment.
If you have any questions, please feel free to reach out to me and my team and we’ll be happy to walk you through the home buying or refinancing process. Don’t forget to subscribe to my channel so you never miss an episode of my show, and make sure you stay tuned to see what I feature next!