Money moves that can ruin your mortgage application


If you are planning on buying a home anytime in the near future, there are a few money moves that you need to make sure that you avoid. These are moves that can derail your application or make it so that you can’t get approved for the loan amount you desire.

Paying for everything with cash -
Without ever using credit, you won’t have any credit history to establish a credit score. Your credit score is extremely important for lending approval.

Carrying too much debt - 
If you accumulate too much debt, you score will drop and also your income to debt ratios might be over what lenders are comfortable with as part of their approval process. Finding the right amount of debt is essential in building your credit worthiness.

Co-signing for someone else -
You might not have debt but if you co-sign for some else it becomes your obligation too and is reported on your credit. Also it has to be considered in your debt to income calculations. Understand the full impact before co-signing on any loan obligation.

Not saving enough cash -
Not only do you need down payment money from 3 – 5% at a minimum but you also might need closing cost money that would be from 1 to 3% of the value of home. Find out how much you really need to buy a home so that you can save aggressively to meet your goals quickly.

Quitting your day job -
You have to demonstrate long term financial stability, quitting your steady job right before applying and striking out on your own might be problematic. Most lenders will want to see 2 years of business returns to establish an income trend and if you have a slow start, you income projections might be hard to justify being sustainable.

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