Daily Archives: March 7, 2016

What Should You Avoid Doing Before Applying for Your Mortgage?

Mortgage Application

Mortgage Application Are you about to apply for a mortgage? Buying a home is a complicated process, and one of the most challenging parts is qualifying for a good loan. What many home buyers don’t realize is that their actions can have a huge impact during the application process.

These are some of the most common mistakes that people usually make before applying for a mortgage.

1. Changing jobs – Lenders want to see a stable job history, and it is one of the biggest factors in the application. This is because a job hopping borrower is more likely to fall behind in payments because of financial instability. If you leave your job or get a new one, it can delay approval.

2. Using credit cards – Charging too much on your credit cards is also a major red flag. Racking up too much debt signals financial irresponsibility, even if you pay it off on time and never have a large balance. Building a credit history is important, but don’t go overboard.

3. Overdrawing accounts – Since a certain amount of cash is required to close the loan, banks will look at your savings and checking accounts to see if you have the necessary funds. Don’t spend too much cash, and avoid overdrawing your checking account no matter what.

4. Missing payments – Do you have student loans, a car payment, or other debt? Don’t miss a single monthly payment from now until your mortgage is approved. If you can’t demonstrate an ability to manage debt, lenders will be very hesitant to give you a mortgage.

5. Hiding information – Lastly, the worst thing you can do is try to hide information from your lender, Provincial Bank reminds. Don’t try to hide where your down payment funds came from, a bankruptcy that happened eight years ago, and so on. A few iffy spots on your application are acceptable, but trying to mislead the lender is not.

Being prepared can make the difference between qualifying for a great mortgage and a rejected application. Make sure that you don’t sabotage your chances.