Mortgage Lending – The Do’s vs. The Do Not’s

So, you think you are going to get a mortgage? No matter what the Internet and TV ads say, things have changed. Rickie Fowler, one of my favorite golfers, tells us how easy it is to get a mortgage while he floats in his pool. Truth be told, he probably pays cash.

Preparation never hurt anyone, so let’s look at some items to get prepared.

It is always best to end on a positive note, so we will visit the list of things not to do when applying for a mortgage:

  1. Don’t go out and buy a new car with a huge car payment. This is the most common mistake people make. Get your mortgage first and then go buy a new car. Auto loans are totally different than home loans. Car salesmen will find you a loan. Mortgage loans have a debt-to-income ratio that you may not meet because of the payment on that new car.
  2. Credit score not great? Work to bring the score up. A mortgage loan officer can help you with this. Your interest rate is based on your credit score. The better your score, the better the interest rate you will receive.
  3. Don’t be late on current account payments. This will definitely bring your credit score down.
  4. Don’t open new accounts or credit cards or close accounts before or during a mortgage. This will pull your credit score down. Don’t rock the boat while your mortgage is going on.
  5. Don’t transfer money from account to account or deposit money that cannot be explained with a paperwork trail. Loan programs have rules concerning this. Tell your mortgage loan officer your plan concerning earnest money, down-payment and/or closing costs. Surprises are the worst things to deal with.

Whew!  Moving on to a positive note, let’s look at what to do when applying for a mortgage:

  1. Check your credit score and confirm you are 640 or above. Again, the higher the score, the better the interest rate for the loan. You can get a mortgage with a lower score, but it impacts the rate.
  2. Save money for your earnest money, closing costs, and/or down-payment. Even though there is 100% financing available, you still have earnest money and/or closing costs involved. You don’t want to be broke at the end of this transaction.
  3. Using gift money for a mortgage. You can receive gifted money, depending on the loan program. Different loan programs have different rules about who you can receive that money from. Consult your mortgage loan officer before accepting gift money.
  4. Ask questions. More than anyone else, we mortgage loan officers realize there are a TON of rules. That is what we are here for. It will be a better experience if you learn something from it for the future.
  5. Deduct the mortgage interest on tax returns. The best reason of all. It is one of the few things left that benefits us on our tax returns.
  6. Make the commitment and be positive. Rules have changed and paperwork  is required. I tell my clients to give them what they want so you can get what you want. Rules are rules. Mortgage loan officers are not the ones who make the rules, they are the ones that implement them to ensure you may receive your loan.

We all wish we were perfect, but life would be boring if we were. If you have plenty of money, a great credit score, no credit issues, and a substantial income, a mortgage is much easier, to say the least. Rest assured, it can happen if you work at it. It just takes some effort to accomplish your goal. You know the old saying, “If you don’t try, you don’t win.”

Now is the time to get going on that dream of owning a home.

For further information, please contact Polly Hendricks ­­­­­­- Mortgage Specialist with Citywide Home Loans. You can find her at 736 West Pioneer Boulevard, Suite 102, Mesquite, Nevada. You can also call her at her office at (702) 749-1512 or on her cellphone (702) 622-2655.

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