The following is a list of items you want to avoid doing when you are starting the process of applying for a mortgage.
1. Don't apply for any new credit; Applying for credit will lower your credit score. You will lose a few points off of your rate and will also potentially change your borrowing ratios.
2. Don't close existing credit lines; Cleaning up your credit right before a mortgage application is not advised as you lose points on your credit score when you do.
3. Don't increase your debt; Don't buy anything large that will impact your credit score or borrowing ratios. If you can't pay it off immediately (without using your down payment), don't buy it.
4. Don't skip payments; One of the greatest impacts to your credit score is your payment history. Any missed or late payments impact your score and borrowing abilities.
5. Don't move your money around; Your lender will need to see your banking information, If you have made large deposits or withdrawals that don't make clear sense to the lender, it can cause problems.
6. Don't change jobs; If you can avoid it, don't change your job. The lender wants to see pay stubs and a letter of employment as well as proof you are not on probation. Lenders want to see stability and longevity.
7. Don't spend your cash; You will need your assets for your down payment, and closing costs. The lender is going to want to see proof of where it came from, how long you've had it, and that it is available to you at the time of closing, they have every right to check one more time before closing!
In summation, it is some times better to do nothing than it is to do everything. If you want to clean up your debt, do it well in advance of your mortgage application. Any spending or changes should be done after the deal has closed and you have moved in!
For any further questions or information please feel free to contact me.
Meghan Van Houten - Mortgage Agent
416-709-9062 | 1-877-366-3487
Independently owned and operated
202-120 Traders Blvd. E., Mississauga ON L4Z 2H7