Now that you’ve set your sights on buying your own home, you must also be aware of possible issues that can prevent your mortgage approval. Your application can be rejected due to certain decisions during your loan’s processing. Read on to know more about possible critical actions that can negatively affect your application’s approval.
Maxing out or Closing Credit Cards – Maxing out and closing credit card accounts immediately send warning signals to mortgage companies. It’s not just because these decisions affect your credit rating but it also reflects poor financial judgment and possible unsatisfactory spending habits. If you can’t pay for your small purchases, large monetary responsibilities such as mortgage dues may go unpaid for too.
Changing Careers – Employment security and consistency is considered by most credit companies a plus because it reflects financial stability. If you do get a higher paying job or promotion then it will be to your application’s advantage. But a sudden shift or career or being fired can cause adverse effects.
Applying for Other Loans Simultaneously – Your capacity to pay the right amount on time can be jeopardized by any other loans made during your application period. And yes, mortgage providers will eventually know if you’ve made any other credit applications. Focus on your mortgage approval first before thinking of borrowing for anything else.
Not Knowing Your Credit Options – This is almost as bad as not knowing your credit rating before application or focusing on one mortgage provider. Without any clear idea which mortgage plan would fit your needs or status, you might end up wasting your time and effort applying for the wrong package. Do research on various mortgage programs, such as the HARP FHA, USDA loans, before submitting any application.
Being aware of your financial activities while you have a pending mortgage application should already be a given. As a matter of fact, you should always be aware of your spending habits whether you’re applying for a loan or not. With that kind of mindset, your credit rating and financial status will eventually improve.