- Don’t Be Late on your Credit Card Payments or Charge Excessively: You need to show your stability with managing money responsibly.
- Don’t Apply for a New Credit Card: Unless your mortgage lender has advised you that this is a good idea to build up your credit, then avoid applying for any new credit cards. Looking for new credit translates into higher risks for lenders.
- Don’t Purchase a New Car: Or any other form of transportation that you’ll have to finance. This will increase your debt-to-income ratio, which is not anything that loan officers want to see.
- Don’t Change Your Job: Do not go looking for a new job during this time. Even if you’re bored at your current job, or tempted by possible pay increases from a different career path, it’s best to keep your current employment situation going during this time. This demonstrations to lenders your stability- Which means you will be less likely to default on the loan.
- Don’t Change Banks: As with your employment, you want your banking history to show stability.
- Don’t Spend Your Money for Closing Costs: You’ll likely be responsible for part of the closing costs associated with a property transaction. Make sure you have enough to pay for your share of the obligation.
- Don’t Close Credit Card Accounts: It may seem like a good idea to close one of your lines of credit after completely paying off the balance, but this is not a good idea. Closing out the credit card wipes that information away- meaning that your loan officer will not be able to take into consideration the fact that you made payments and completely paid off that card.
- Don’t Purchase Furniture on Credit: I know it’s exciting to start picking out fresh furnishings that will go perfectly in your new home, but WAIT! Like a new car, financing large ticket-items will only increase your debt-to-income ratio, and now is not the time.
- While it may seem tempting to go out and spend a bunch of money on that new TV, a fancy new couch, or furniture, your best bet is to keep that money in hand. Avoid buying a bunch of new things until you close the deal on the house itself.
- Don’t Make Large or Cash Deposits into your Bank Account: Lenders like to see that the money for you down payment is “seasoned”, meaning it has been in your account for at least two months. It doesn’t necessarily look good when funds just appear all of a sudden.
- Don’t Co-sign a loan for Anyone: Even if you’re not the person making the payments, it will still increase your debt-to-income ratio. And as we’ve learned, that’s not what lenders like to see.