Mortgage Do’s and Don’t’s

Maybe the first article of the year should be rather simple and to the point. Things you should really consider when trying to qualify for a new home loan or refinance.
Let’s start with the DONT’S! 1) DON’T make a large purchase on a car, boat, furniture, jewelry, etc., right before you decide you want a new home! For some odd reason over my 35 years, it is a mind-boggler that 70% of people finance a car within 6 months of trying to purchase a home. That car payment could impact your ability to qualify for your dream home! Buy the HOUSE first, then buy the CAR! 2) DON’T add any NEW CREDIT! Opening new credit cards will LOWER your FICO score immediately. 3) DON’T move money around or transfer bank balances (except between linked accounts) unless you discuss with a loan officer first on the impact of doing so. 4) DON’T deposit CASH into accounts within 2 months of buying a home! Since you can’t prove cash, lenders don’t allow it. 5) DON’T pay off ANY collections or charge-offs! I know this sounds crazy, but this will HURT YOUR CREDIT SCORES in the short term! 6) DON’T close any credit cards, especially if you have had that card for a long time (5 years or more)! 7) DON’T overcharge your credit limit! This will severely impact your credit scores! 8) DON’T consolidate ANY DEBT! 9) If you are going to receive a GIFT from a relative, DON’T have that relative gift you the money until you have spoken to your lending professional first! This is a BIG ONE! It is best to have the relative WIRE THOSE FUNDS DIRECTLY INTO ESCROW at the close of the transaction.
Now for the DO’s! 1) If you are refinancing, DO continue to make all your mortgage payments, EVEN if your loan officer tells you not to (because if the deal closes late and it’s past the 30th of the month, YOU reap the 30 day late on your credit report!) 2) DO continue to work! And for the same employer! In other words, don’t quit your job to start a new one unless you discuss with your mortgage professional! 3) DO continue to live at your same address. Moving around during an escrow can be a real headache for your lender! 4) DO continue to make ALL your payments on time to all creditors. One slip during an escrow can cause serious damage; even prevent you from purchasing or refinancing.
For any questions on DO’s and DON’T’s, call your Lending Professional, Curt Kravitz, at 661-705-2500! Cheers to an excellent NEW YEAR in 2022!