1. Don't change your job before applying for a home loan.
Also, now is not the right time to become self-employed or to quit your job.
2. Don't buy a new car -- now is not the time.
Financing any form of transportation with a loan increases your debt to income ratio. When applying for a mortgage, it's best to wait.
4. Don't buy furniture on credit before purchasing a home.
Buying new furniture increases your debt-to-income ratio. If your ratio is excellent, there should be no problem. And if there's money in your bank account, this should not affect you. However, it is best to save your money and buy after closing. Of course, you need a bed to sleep in, so use your money wisely.
5. Don't be late on your credit card payments or charge excessively.
Your credit report is a picture of how you spend your money, so take responsibility so borrowers can see how you manage your money.
6. Don't make large deposits into your bank accounts. Lenders check for what is termed "seasoning", where you can show funds have been in your bank account for a couple of months. Gifts that do not have to be paid back are find, but lenders may worry you borrowed the money.
7. Don't lie on your loan application. Tell the truth on your application. Fraud is not taken lightly on mortgages. It's against the law.
8. Don't co-sign a loan for anyone. If you co-sign for someone else, this will increase your debt-to-income ratio and can hurt your chances of getting a mortgage.
9. Don't apply for new credit cards while applying for a mortgage. If you open new credit card accounts, it shows more debt when underwriters review your application. It's not a good idea to take out new credit cards while applying for a mortgage loan.
10. Don't spend money that you need for closing costs. Closing costs are a huge part of a mortgage that you need to consider. Be sure to hold money aside for closing costs.
What Is a Home Appraisal?
An appraisal is an unbiased professional opinion of a home's value. Appraisals are almost always used in purchase and sale transactions whether residential or commercial. They are commonly used in refinances. An appraisal is used to determine whether the home's value or contract price is appropriate when considering the home's condition, its location, and its features. Lenders who are refinancing a home are not going to lend a borrower money until they know that the home's value is worth the financing being provided.