The 10 Mortgage Commandments of Mortgage Lending – Mistakes to Avoid

The journey to homeownership is both thrilling and challenging. To help you navigate this significant undertaking, we present the “10 Mistakes to Avoid When Buying a Home” – or what we at Morgan Financial like to call “The 10 Commandments of Mortgage Lending”. As you embark on this exciting chapter, it’s crucial to be mindful of potential pitfalls that could hinder your mortgage approval, in fact, that’s why we came up with this list of 10 things because in our 21 years of originating mortgages, these are the most common things that we’ve seen happen. Be sure to watch the video if you’re more of a visual or audible learner.

1 – Don’t change jobs, become self-employed, or quit.
One of the cardinal rules in mortgage lending is stability. Any alteration in your employment status during the mortgage application process can jeopardize your home loan. If a job change is imminent, communicate promptly with your lender to assess its impact on your loan eligibility.

2 – Don’t buy a new car.
Simultaneously purchasing a house and a car can complicate your mortgage approval due to the impact on your debt-to-income ratio. Consult your loan officer before making any major purchases during the application process.

3 – Don’t excessively use credit cards, or let your accounts fall behind.
Maintain financial prudence to avoid negative effects on your credit score. Additional credit card usage or missed payments can affect your ability to qualify for the loan. Be cautious of hard inquiries and keep your credit score intact.

4 – Don’t spend your money that was set aside for closing costs.
Closing costs are a crucial aspect of home buying. Shop around for the best rates and be prepared with extra cash on hand to cover unexpected expenses. This ensures a smooth closing process without financial hiccups.

5 – Don’t omit debts or liabilities from your loan application.
Full disclosure is key. Pay off major debts before applying for a home loan, and ensure your financial stability aligns with lender requirements. Undisclosed liabilities can hinder your mortgage approval.

6 – Don’t buy new expensive furniture.
Delay large purchases, like extravagant furniture, until after closing. These purchases can impact your debt-to-income ratio and credit score, potentially affecting your loan eligibility.

7 – Don’t originate any inquiries into your credit.
Monitor your credit score vigilantly. Unnecessary credit inquiries can negatively affect your credit score, potentially impacting your loan approval. Stay informed about your credit standing throughout the entire home buying process.

8 – Don’t make any large deposits without first consulting with your loan officer.
Ensure transparency in your financial transactions. Large, unexplained deposits can raise questions about your financial stability. Consult your loan officer before making substantial deposits during the application process.

9 – Don’t switch banks or bank accounts.
Maintain a steady paper trail for your financial documentation. Changing banks or accounts can cause delays in the pre-approval process, as lenders require consistent documentation to assess your ability to afford the loan.

10 – Don’t cosign on a loan for anyone.
Cosigning poses significant risks. Avoid cosigning loans unless you’re prepared to assume the responsibility. Protect your financial well-being and maintain a secure credit profile during the home buying process.

Talk with a Mortgage Expert!

As you embark on the exciting journey of buying a home, remember the mortgage commandments to ensure a seamless process. Consult with your loan officer, stay financially prudent, and adhere to these guidelines for a successful homeownership experience. Don’t let common mistakes hinder your dream home – follow the commandments and secure your path to a new chapter in life.

Contact us today, your journey to homeownership starts here! Call: 321-757-3570