The Ten “Don’ts” of Borrowing
CMS Mortgage Solutions Inc.
CMS Mortgage Solutions Inc.
Published on April 19, 2022
The Ten “Don'ts” of Borrowing - CMS Mortgage Solutions

The Ten “Don’ts” of Borrowing

As any experienced lender knows, credit is one of the most important factors in determining whether or not a borrower will be approved for a mortgage. A strong credit score indicates to lenders that the borrower is responsible and capable of repaying the loan, while a weak credit score can make it difficult or impossible to get approved. That’s why it’s so important for borrowers to avoid making any mistakes that could damage their credit scores.

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The Ten Top "Don'ts"

1. Don't change or quit jobs or become self-employed. Lenders require steady employment and income consistency. Change jobs after you change mailing addresses.

2. Don't buy a car (or boat, or RV, or four-wheeler…). Purchasing a vehicle while buying a home could temporarily lower your credit score.

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3. Don't purchase any big-ticket items. Similar to vehicles, wait until after you own the home to buy that furniture or fancy sound system.

4. Don't use credit cards or be late on any payments. This double-whammy hurts you both with the creditor and your mortgage lender. Limit your credit card use, and don't let any accounts fall behind.

5. Don't apply for credit anywhere. Any new credit card or other line of credit will mean an inquiry, which will impact your credit score. Lenders will check your credit a second time right before closing, and new inquiries will result in delays.

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6. Don't "forget" debts on your loan application. If you owe back taxes, have liens, or other liabilities they will eventually be discovered. Be truthful on your application.

7. Don't spend your savings. Don't jeopardize your ability to make a down payment or pay closing costs by spending that money you've put aside.

8. Don't make large deposits into your accounts. A sudden cash infusion into your bank account will raise a red flag and require explanation. If you are receiving gift funds, talk to your mortgage banker about what is required to document that money.

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9. Don't open, close, or change bank accounts. Perhaps you are moving to a different state and want to open an account with a local credit union. Wait until after your loan is closed. New bank account activity will require a paper trail and slow your loan process.

10. Don't co-sign a loan for anyone. Co-signing can lower your credit score and raise your debt-to-income ratio (DTI), which lenders look at closely. Also, if the borrower defaults, you will be on the hook to pay it off - not a good place to be if you have a new mortgage too.
Don't Forget These "Do's"

There are a few things you can do to help expedite your loan’s progress.

1. Be sure to submit all requested documents as quickly and thoroughly as possible.

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2. Be responsive to requests for additional information from underwriters.

3. once you have found the home you want, start shopping for home insurance quotes right away.

Taking these steps will help ensure a smooth and speedy loan process.

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