Do’s and Don’ts Before Applying For a Mortgage Loan
If you are buying a home sometimes soon and have plan to apply for a
mortgage loan follow these Do’s and Don’ts recommendations:
Do’s and Don’ts Prior to Applying
a Mortgage Loan:
About two months (if you know your credit is good) or 8-10 months
(if you know you have credit issues) prior to applying for a
Mortgage loan, get hold of your free credit reports from three major
in the United States; Equifax, Experian and TransUnion. You can
request your credit reports via phone, mail, or website from each
bureau. Optionally, you can request your credit score from each
bureau by paying some fee. There are also many websites that provide
you with reports and scores and monitoring your credits for a fee.
However, most of them offer a one-month free trial. See
What is a Credit Score to find out how and where you can request
your credit reports and scores.
Remember you can request and get your credit reports without hitting
your credit score as many as times you want. However, usually you
are only entitled to one free report from each credit bureau in a
year or more if you meet certain criteria.
After getting your credit Reports, Do the following:
About 8-10 months prior to applying for a Mortgage loan, get hold of
your free credit reports from three credit bureaus.
Check and report for correction any inconsistencies, inaccuracy,
missing information or credit history, the negative items that
should have been removed or deleted, etc.
Try to negotiate, work it out with creditors and resolve issues
regarding negative items as much as possible.
Pay and continue to pay all your bills (at least the “Minimum
Payment” on Credit Cards) and loans on / or before the due time.
Look at each credit card’s Balance/(Line of Credit) ratio and pay as
much as possible to reduce the unpaid balance to a point the that
ratio becomes less that 30%.
Have a good cushion of available credit between your current balance
and your credit limits on all open trades
Time-by-time, request a soft credit line increase. Typically,
creditors can increase your line of credit a couple of hundreds or
thousand dollars without running your credit report, if you have a
good record or relationship with them for a year or so.
Use (charge at least some amounts) all your credit cards including
those that you usually don’t use every month. And off course pay
them on time.
Pay off smaller debts.
If you don’t have any credit card or credit history, you need to
establish a credit history. E.g., Apply Department Store Charge
Cards and use them wisely, pay your bills on time. It takes at least
six-twelve months to show established credit in your credit reports.
Repeat above steps about 2 months prior to applying for a Mortgage
loan. Get hold of your free credit reports from three credit bureaus
again and go through the same steps as above until you have a good
Don’t be tempted to open a store charge card to receive discounts.
Don’t apply or accept any new Credit Card
Don’t apply “Hard” Line of Credit Increase.
Don’t apply for a new loan.
Don’t apply excessively again and again to get a credit card.
Don’t carry a large number of credit or store charge cards
Don’t Allow anybody run your credit report,
Don’t Close any of your Credit Cards
Don’t purchase a major item and charge Credit Cards
Don’t let the ratio of Amount Owed to Credit Line be greater than
30% for each card.
Don’t be late paying your payments or obligations
Don’t Change your Job
Don’t get involved in a law suit
Don’t file for Bankruptcy, foreclosure, short sale, etc.
Do not place dispute in your credit report. This causes more delay
for approving a loan and could cause a higher interest rate.
Please click the link to see
Do’s and Don’ts After Approved a Mortgage Loan