- Do start checking up on your credit report for inaccuracies/late payments and fix the issues several months in advance
- Do dispute major inaccuracies, like accounts that don’t belong to you or false collections need to be disputed with the credit reporting agencies.
- Do keep several credit cards open. If you have fewer than three, opening a major credit card and using it to purchase your everyday items is a good idea. Only open new credit cards/trade-lines when you are at least six months away from applying for a loan. New trade-lines create a level of uncertainty for the credit bureau. When you do open a card, only use 30% or less of the available credit balance. This is not always required and varies on a case by case basis for each borrower.
- Do start saving for your down payment. Most down payments are between 3-20% of the homes purchase price, so be sure to keep that in mind when thinking about applying for a new mortgage.
- Do notify your lender if you are going to receive gift funds from a family member or friend. Gift funds require extra paperwork to make sure that it is indeed a gift and not a personal loan.
- Don’t close credit cards without speaking to a mortgage advisor first; the longer and more consistent your credit trade lines are, the better your score will be.
- Don’t make big purchases, especially not on credit, even if you’re tempted by furniture or new appliances.
- Don’t make large bank transfers without speaking to your lender first. Big transfers can send red flags to your underwriter and you’ll have to provide the entire paper trail for that transfer. Your lender will have the best advice for you so definitely speak to them beforehand.
- Don’t quit your job, or change lines of work right before or during the loan process. Underwriters like to see income stability and starting something new or ceasing income could cause some speculation.
If there are any questions about this, please reach out to Bluefire Mortgage Group for a no-obligation credit consultation at (760) 930-0569.