I get many calls from buyers and friends wanting to know how to stay in good standing when they are getting ready to apply for a mortgage loan. Here are some basic do’s and don’ts:
- Stay current on all your existing accounts.
- Do continue to use your credit card accounts as you normally would. Don’t raise a red flag by changing your habits.
- Talk to your lender if in doubt; he/she will answer your questions easily and you won’t run the risk of losing out on that loan.
- Don’t apply for any new credit.
- Don’t pay off collections accounts as it may cause a drop in credit score.
- Don’t max out your existing credit cards.
- Don’t consolidate debt, i.e., moving all debt to one credit card.
- Don’t close any credit card accounts.
- Don’t co-sign on any other loans or change your name/address/phone – it raises a red flag.
- Don’t change any of your investments until after your loan has been secured.
- Don’t make any large, unexplained deposits to your accounts.
- Don’t make any changes to your employment or income.
I hope this helps. I know some of it is counter-intuitive, such as paying off collections accounts but nonetheless, this is information that I received from the lender.
Please let me know how I can help you in your next home buying process. Please give me a call 602-486-3587.