Minneapolis, MN: Buying a home is an exciting time, but going through the mortgage process can be between super easy, to frustratingly challenging, depending on your personal situation. Some of the mortgage process annoyances and headaches can be avoided with just a few tips of things not to do during the mortgage application process:

Don’t do these things after applying for a mortgage without talking to your Loan Officer first:

1. DON’T CHANGE JOBS if at all possible. If a job change does come up, be sure to reach out to your Loan Officer right away for instructions. Some job changes are not really much of a big deal at all, while others can get you denied, like switching from a salaried job to a new commission job.
2. DON’T MOVE MONEY AROUND ACCOUNTS without consulting your Loan Officer first. All loan guidelines require we prove, document, and verify all monies needed to purchase the home. We must prove any large non-payroll deposits into your accounts. Opening new bank accounts, or moving money around from different accounts can sometimes complicate things, or at least require more paperwork to prove what you did.  Other times it is necessary, but you need to understand what lenders will require for documents. For example, taking out a 401k loan of OK, we just have to document it.  Large cash deposits from money at home, or selling something can be problematic in the short -term.  All the money needed in one account makes the process simple.
3. DON’T MAKE LARGE PURCHASES ON CREDIT, like all new furniture for the new home, or a new car. Lenders approve you based on your current debt-to-income ratio. Adding new debt may not make a difference to one client’s debt ratio, but can easily turn a pre-approval into a denial for the next client.
4. DON’T CO-SIGN for anyone else during the process. Co-signing means it is your debt too, and will be added to your debt-to-income ratio’s.
5. DON’T APPLY FOR NEW CREDIT CARDS. Right before closing, your lender will pull new credit. Any new inquiries must be addressed. Did you get a new loan? You need to explain the inquiry, and document if you did or didn’t get new credit. if you did, you need to prove the terms, conditions, and payment amounts. This may delay your closing, or even kill your approval if the new debt pushed your debt ratio over guidelines. This includes any store offer’s of discounts off your purchase by getting a new store credit card.
6. DON’T PAY OFF COLLECTIONS OR CLOSE ACCOUNTS. This may sound counter intuitive at first, but each client is different. , Paying off a collection or lien may require proving where you got the money to pay it, and may even lower your score temporarily. Closing unused but old accounts can effect your credit score, part of which is based on how long you’ve had credit, and utilization of credit compared to your credit limits. We understand sometimes this is required to get your loan.
7. DON’T DISPUTE ITEMS ON YOUR CREDIT REPORT and expect to apply for a mortgage loan at the same time. Plan on clearing up credit, and once done, THEN applying for a home loan. Active disputes on your credit report stop the disputed trade line for being counted in your credit score, therefore many loan programs automatically deny you until the dispute is over.

The Big Takeaway

The big takeaway on all these items if that you should always 100% fully disclose and discuss your plans and situation with your Loan Officer BEFORE doing any of these items to understand mortgage guidelines, how it may effect your approval, and what documentation may be needed if you must do any of these things.