VERY IMPORTANT DO’S AND DON’TS:
• Never close a credit card. I have found that clients who have a long on time payment history with their credit cards get higher credit scores. Higher the score the better. The bank will look favorably on credit cards
that have been paid on time for many years.
• Do not skip your mortgage payment. A 30 day late on your mortgage, whether it is on your home or another property you own, will immediately lower your credit score by a substantial amount. Be vigilant about paying that mortgage on time!
• Let us know if you are planning to be away during the loan process. Our team needs to know if you will be “out of reach” during the loan process. When we lock in your interest rate it is for a certain period of time and if you are on vacation that can affect the closing of your loan and could affect your interest rate. Three day weekends are usually fine…just let us now of any extended time away from home.
• Contact us prior to transferring funds (gift money from family, down-payment funds, etc.) from accounts you will be using for this transaction. We need to know which account(s) you will be using for your initial deposit to escrow, down payment and closing funds. The reason is the lender wants to track and verify the money you put into escrow so they can make certain it came from the correct source. Which is your money and which is gift money!
• Do not open or apply for a new credit card during the process. Opening a new credit card may lower your credit score and may lower your qualifying ability due to higher debt. If possible, do not take on any more debt when doing a loan. I have had clients who did not listen to this advice and opened a credit card during the process. Unfortunately, they had to lower their loan amount and put more money down to buy the same home!
• Do not buy anything major during the loan process (with cash or credit). The one item that usually comes up is buying a car during the process. We understand that life goes on and you may need a new car when doing a loan. The challenge is that new payment will affect your qualifying “ratio.” Call us and tell us your situation. Depending on your income you may be just fine to buy a car.
• Do not quit your job, just before or during the loan process! This seems obvious, but is worth repeating. If your income goes away so does the loan in most cases. In most situations you may be able to change jobs during the loan process and show the bank that your income is continuing or increasing with this new company.
• Do not withdraw large sums of money from your accounts prior to or during the loan process. Frankly, large deposits and withdrawals from your accounts that are given to the bank will be questioned. The lenders want to understand why you are taking large amounts out or putting large amounts into your accounts. Large to the
bank is $2,000. You may well have a good reason, but be ready to explain to the bank.
• Do not max out your credit cards. If your credit card has a loan limit of $10,000 try not to have more than $5,000 on the card. In other words, the banks like to see that you keep your cards at 50% or lower of the maximum loan limit. If you are “maxing out” your cards, the bank will see that as a negative and your credit score will go down. Easier said than done, but know that this a sure way to lower your score. Lower score can
affect your qualifying as well as your interest rate.