What You Should and Should Not Do before Applying for a Mortgage

Do you know what you should and not do before you apply for a mortgage? If you’re reading, it’s safe to assume that you don’t know, but want to know before you buy a home. And we would like nothing more than to help you make the right decisions when applying for a mortgage.

What You Should Do When Applying for Mortgage

You should do the following when applying for a mortgage:

• Reduce Your Financial Debt

Don’t take on any extra debt before you apply for a mortgage since a mortgage company qualifies accepts or rejects your request for a mortgage based on your debt-to-income ratio. You’re less likely to qualify for a mortgage if you have a higher debt-to-income ratio, as you’re perceived as a risk.

• Resolve All Credit Report Issues

A bad credit score can cause the mortgage company to reject your request for a home loan. Work on improving your credit score, resolving any issues you come across in the credit report, and then apply for pre-approval.  

• Look at Your Partner’s Credit

If you and your partner intend to buy a new home together, talk to your partner about their credit. You need to talk to your partner about any financial information that you’ll show in your mortgage application. You don’t want to find out later that your partner has a bad credit score or is knee-deep in debt after you’ve found your perfect home. 

• Consult with a Professional Mortgage Broker

A professional mortgage broker can help you walk through the entire mortgage process and suggest any issue with your financial profile that you need to address before you apply for a mortgage. Set up an appointment with one of our experienced mortgage brokers to assist you with your home loan application.

What You Should NOT Do When Applying for Mortgage

You should not do the following when applying for a mortgage:

• Making Big Purchases

You should avoid making any big or major purchases, such as buying furniture or a car if you want to apply for a mortgage, as it can jeopardize your chances of getting one. The lender requires you to have a certain amount of cash in your bank account. Making a large purchase can affect your debt-to-income ratio and increase the likelihood of the lender denying your request for a home loan.

• Closing Your Credit Card Account

We’re happy that you’re cleared your debt, but if you’re shopping for a home, closing your credit card account is the last thing you want to do. If you close your credit card account, you won’t have access to available credit. Decreased access to available credit can impact your credit score. Once you’ve cleared your credit card, forget about it instead of closing it

• Changing Your Bank Account

Don’t change your bank account if you want to apply for a mortgage. You should also not make any large deposits or withdrawals from your bank account. If you really need to deposit or withdraw money from your bank account, keep a record of it.

• Switching Jobs

If you switch jobs right before you apply for a mortgage, your request for a home loan may or may not get approved. A good candidate for a home loan is someone with a stable job who can maintain a constant stream of income. If you have a history of working at the same company for at least two years or you switched jobs, but you have a similar or a higher income, you may still be eligible for a home loan.

When you’re ready to apply for a mortgage, Northwest Mortgage will be here to assist you. Contact us today if you’ve any questions for us.