Credit Do's and Don'ts when applying for a loan

9 Ways Buyers Can Accidentally Disqualify Their Loan Before Closing Escrow

We constantly hear stories about borrowers at other mortgage companies who come to us who are accidentally disqualifying themselves before the closing.  This can be avoided if you are educated on what lenders look for.
I have seen each of these happen at one time or another on a loan over the years. In fact recently, we had a buyer who went on disability right after she got into contract and never told anyone. Then two weeks into the transaction she decides to tell us when we asked for an updated paystub, she seemed to think it would not be an issue as she was still getting paid by the state. Unfortunately we cannot fund and close on her loan until she is back at work earning her regular income.
 
The 9 Most Common Mistakes Borrowers Make – Please DO NOT DO THESE!

  1. Don’t have ANYONE pull your credit once you are pre-approved for a home loan.
  2. Don’t buy a new car or trade-up to a bigger lease.
  3. Don’t quit your job to change industries or start a new company.
  4. Don’t switch from a salaried job to a heavily-commissioned job.
  5. Don’t transfer large sums of money between bank accounts.
  6. Don’t forget to pay your bills — even the ones in dispute.
  7. Don’t open new credit cards — even if you’re getting 20% off or Zero interest.
  8. Don’t accept a cash gift without filing the proper “gift” paperwork and talking with us first.
  9. Don’t make random, undocumented deposits into your bank account.
  10. Don’t cosign on any debt with anyone (*you will be 100% responsible for it).

 
WARNING: The Lender Will Do a Soft Pull of Your Credit Again Before Closing

It is also important that you are aware of a rule that requires a lender to re-pull their credit report just prior to closing and to look for any changes. If the “final” credit report doesn’t match the original credit report, the mortgage may be subject to a complete re-underwrite and, in a worst case scenario, a loan application denial.
Some of the things underwriters are looking for include:

  1. Did you apply for new credit cards while your loan was in-process?
  2. Did you run up existing cards while your loan was in-process?
  3. Did you finance an automobile while your loan was in-process?
  4. Did you make some other major purchase while your loan was in-process?
  5. Did you add non-disclosed debts while your loan was in-process?
  6. Did you cosign on any debt with anyone?

Each of the above is a red flag to underwriting, so it is important that you are aware and are being educated during the loan process in regards to your credit.
A golden rule for home loan borrowers to follow is, they should NOT purchase anything on credit until AFTER closing and if you have any changes in employment, you need to bring it up immediately!
If you have any questions, please feel free to contact me directly at 702-326-7866 or by email at info@aundreabeach.com