Mortgage Application ApprovedIt’s natural for a home buyer to start thinking of decorating ideas during the mortgage application process. After all, you finally found the home that will complement your luxury lifestyle and you want it to be perfect, both inside and out! While it’s okay to dream of how you will personalize your new home and maybe even start planning, this is not the time to make big changes. The mortgage application process is the time when you should be particularly cautious with your credit and finances.

When a mortgage loan borrower completes the mortgage application, the mortgage broker, lender or underwriter will request a credit report. Based on information in the report and your application, a mortgage pre-approval will be granted. From this point, any negative changes to your credit report and credit scores can be cause for a mortgage loan denial.

5 Things Not To Do During Your Mortgage Application Process

  1. Don’t Make Large Purchases – New credit inquiries will likely cause a drop in your credit scores, as will charging large ticket items like appliances and new furniture. A large purchase on a credit card will increase your credit debt and increase the minimum credit payment, thus causing a drop in your credit scores and a higher debt-to-income ratio.
  2. Don’t Apply For New Credit – As a mortgage loan borrower, you should never apply for new credit of any kind during the mortgage application process. Never pay off a collection account or charge off account unless told to do so by the mortgage lender. Paying off an old, negative debt could reactivate that account and cause your credit scores to drop.
  3. Don’t Close Accounts – Never close active credit card accounts during the mortgage application process. Closing a credit card account that you do not use will definitely drop your credit scores. Also, never max out your current credit cards. This will also cause your credit scores to drop. Always maintain a 25% or less of balance on all of your credit accounts.
  4. Don’t Co-Sign for Others – Never co-sign for anyone during the mortgage application process. Co-signing will hurt your credit scores for two reasons. First is the credit inquiry, hard pull of your credit report, and second, you are taking on more debt. Do not dispute negative information on your credit report even though you have proof that the negative information is not yours. This will halt the mortgage application process. Also, do not enroll in any credit monitoring services as well. The less activity there is on your credit profile the better it is. Any activities on your credit during the mortgage application process will alert the underwriter as a red flag and will scrutinize your mortgage application process and letters of explanations will be require which might delay you home loan closing.
  5. Don’t Pay Late – Never be late on any monthly debt obligations. Even one late payment during the mortgage application process could potentially halt your home loan closing until there is a valid explanation.

If you have questions about the Fort Lauderdale real estate market or mortgage application process, contact us! Selling Fort Lauderdale real estate and providing exceptional service is our passion.