Before applying for a mortgage, whether it’s a purchase loan or refinance, there are some critical Do’s & Don’ts to keep in mind. Following these tips can help you qualify for a loan with the best rates and prevent delays in the approval process.

We’ve compiled a list of Home Financing Do’s and Don’ts below, which are designed to make you look your best to potential lenders and ensure that there are no “dings” that can negatively affect your credit score.

The better you look to lenders, the more likely you’ll be approved for a mortgage or refinance with the most favorable rates and terms.

DO check your credit reports for any mistakes.
You can request free reports from all three credit reporting agencies. Review each one and report any errors immediately so that they can be removed.

DO continue to pay all bills on time.
Pay your current mortgage, car payments, and all other bills on time.  One 30-day late payment can lower your credit score by 30-75 points.

DO pay down debts.
If you’re able to pay down debt, go ahead. The less debt you have, the better you look to lenders. However, DON’T pay off collections unless your mortgage advisor specifically asks you to do so to secure financing. Generally, paying off old collections causes a drop in credit score.

Do continue to use your credit as you normally would.
Red flags are easily raised within the scoring system. If it appears you are diverting from your normal spending patterns, it could cause your score to go down. For example, if you’ve had a monthly service for internet access billed to the same credit card for the past three years, there’s no reason to drop it now. Again, make your changes after the loan closes.

DON’T apply for any new credit.
When you receive invitations to apply for new lines of credit, don’t respond.If you do, that company will pull your credit, which will have an adverse effect on your credit score. Likewise, don’t establish new lines of credit for furniture, appliances, computers, etc.

DON’T close credit card accounts.
If you close a credit card account, it can affect your debt ratio to available credit, which has a 30% impact on your credit score. If you want to terminate any account, do it after your mortgage closes.

DON’T make any big purchases.
Don’t buy expensive cars, jewelry, furniture, or other significant purchases, and definitely don’t run up your credit cards. This is one of the fastest ways to bring your credit score down. A good rule of thumb is to keep your credit cards below 30% of the available limit.

Don’t change jobs.
Don’t quit your job, switch jobs, or do anything else that would change your income. Any change in employment could negatively affect your loan eligibility.

Don’t raise red flags to the underwriter.
Don’t co-sign on another person’s loan or change your name and address. The less activity that occurs while your loan is in process, the better it is for you.

Don’t make any adjustments or transfers in your asset picture.
Don’t change investments, move positions, close accounts, open new accounts, or substantially change your asset picture without contacting your mortgage advisor first.

Don’t make large unexplainable deposits into bank accounts.
An underwriter will question deposit amounts exceeding historical amounts unless the deposit is a documented gift.

If you have any questions during the loan process, DO call Cross Timbers Mortgage loan specialists. We are here to guide you through your home financing process with our expertise and personalized customer care.