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10 Crucial "Don'ts" When Applying for a Real Estate Loan

Updated: Jan 21

January 20, 2024 @armkeysuccess

Securing a real estate loan is a significant step in your homeownership journey. However, there are certain "don'ts" you should be mindful of to ensure a smooth loan application process.

1.Job Stability Matters:

  • Don't change jobs, become self-employed, or quit your job during the loan process. Lenders prefer stable employment history.

2. Vehicle Purchases Can Wait:

  • Don't buy a vehicle, or if urgent, consult your mortgage broker first. New debts can impact your loan approval.

3. Credit Cards Require Caution:

  • Don't use charge cards excessively, and keep accounts up to date. Consistent credit behavior is crucial.

4. Preserve Closing Funds:

  • Don't spend your set-aside funds for closing costs on other purchases. Keep them reserved for the closing.

5. Full Financial Transparency:

  • Don't omit debts or liabilities from your loan application. Full disclosure is essential for accurate assessment.

6. Furniture Shopping Post-Closing:

  • Don't buy furniture using credit or closing funds. Window shopping is fine, but major purchases can affect your finances.

7. Credit Inquiry Caution:

  • Don't initiate credit inquiries, as multiple inquiries can impact your credit score. Hold off on new credit until after closing.

8. Large Deposits Require Consultation:

  • Don't make significant deposits without consulting your mortgage broker first. Unexplained deposits can raise questions.

9. Financial Institution Stability:

  • Don't switch banks or move money to another institution. Stability in your financial history is preferred.

10. Avoid Co-Signing:

  • Don't co-sign a loan for anyone during the loan process. Co-signing introduces additional financial risk.

By steering clear of these "don'ts," you pave the way for a successful real estate loan application, ensuring a smoother path to homeownership.

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