4 Do’s and Don’ts During The Loan Process
Don’t – Apply for new credit until the loan funds.
.Adding multiple credit lines require multiple credit inquiries which can cause your score to drop initially
Don’t – Allow multiple credit checks.
Excessive rate shopping can lower your score with too many inquiries
Don’t – “Shop” for new credit before closing (Home furnishings, cars, etc.)
Excitement to furnish a new home is natural, but don’t get sucked in to a salesman’s pitch for zero down for 5 years until after your loan closes. Every credit pull during this time can negatively affect your credit
Don’t – Dispute anything on a credit report
Fannie Mae and FHA both do not allow disputed accounts on a borrower’s credit report, so wait until after your loan closes to dispute any accounts, and resolve any current disputes
Do – Disclose all debt
Sometimes there will be debt not disclosed on your credit report and lenders need to know about it.
Underwriters will usually uncover addition debt not disclosed on the application or on the credit report. These “new” payments can easily ruin a closing by negatively affecting your ratios
Do – Explain or document all inquiries on your credit report.
If you were just “shopping around” and didn’t buy anything a simple letter of explanation as to why your credit was pulled will suffice. If you did make a credit purchase it needs to be disclosed sooner than later so the payment can be factored in
Do – Communicate constantly with your loan officer and real estate agent.
Last minute credit emergencies can be a death sentence for a loan. Don’t be embarrassed to discuss an emergency loan to a family member or a medical emergency that comes up. These are much more effectively worked through with as much time as possible to determine if the loan will still qualify
Do – Pay all your bills on time
Even confirm them during the loan process as a 30-day late can ruin a mortgage loan, even if the last 7 years of payment have been late-free
For more information regarding the purchase of a home or other mortgage topics, contact myself or your local mortgage professional.
