“That water’s been there for years.” “This was installed without a permit.” These are just a couple of things you probably shouldn’t say to your homeowner’s insurance but when you’re applying for a home loan, there is some no-no verbiage you should probably leave out as well.
Getting a mortgage loan is a very involved process that will require a full examination of your financial situation. There will be lots of questions you’ll need to answer and while you want to be as honest as possible, there are certain phrases that can sabotage your chances of getting a home loan. Here are 10 things you should never say to your mortgage lender.
#1. Flat out lying.
Like I just mentioned before, you want to be as honest as possible. Lying to your mortgage lender about anything could ruin your chances of getting a home loan. Line(lying) can also mean omitting or providing misleading information on an application and it could be punishable as a felony. Be as truthful as you can.
#2. How much money can I get?
Of course, you want to know how much money you can borrow but lenders also want to know that you are an informed consumer. If you haven’t got a clue as to how much you can afford, you may not have done your homework. Also, borrowing the maximum limit could put you in a financial strain. Lenders want to know that you will be a responsible borrower and will pay back the loan.
#3. Admitting you forgot to pay your bills.
This is not necessarily lying to your lender but the more you forget to pay your bills, the more that will show up on your financial record. Consistency is extremely important to mortgage lenders and they need to know that you will be a responsible bill pair(payer?).
Related: can I go to Google for a mortgage?
#4. Admitting you just opened a bunch of new credit accounts.
One of the worst things you can do when applying for a mortgage is to open more accounts or lines of credit. Lenders are trying to figure out how much you are bringing into the household versus how much is going out and if your debt is going up rapidly, especially when you are applying for a loan, that’s not a good sign.
#5. Maxing out your credit cards.
We may all have a little bit of credit card debt from time to time but if all of your credit cards are maxed out and you have no reserves, lenders view you as a risky borrower. The more debt you have will change your debt to income ratio, which means you could risk higher interest rates or risk getting the loan altogether.
#6. Admitting you change jobs all the time.
Just like paying your bills on time, lenders like consistency in your job. They want to know that you’ve been at your job for some time and that you are a consistent employee.
#7. Considering switching from a salary position to a commission job.
This also is a big red flag for lenders. It’s that consistency again. Commission jobs can be very inconsistent and there may be months where you are not getting as much income as you are used to. This could affect your mortgage payments. Having a steady salary is a big plus for mortgage lenders.
#8. Telling lenders that your parents will help you out.
It’s not uncommon for parents to gift their children money for the down payment but it cannot be alone(a loan) and if the adult children feel that they can constantly go to mom and dad for help, the lender might not think you are a stable borrower. Make sure you talk to your lender about the rules before receiving a cash gift for a down payment.
#9. Asking your lender what happens if you can’t make your mortgage payment.
Banks don’t want real estate on their books. They want you to eventually own the property so asking about foreclosures or short sale before you even finalize the sale can put up a red flag. It’s too early to discuss this and again, lenders might consider you a risky borrower.
#10. Not knowing your credit score.
In today’s day and age, it is super easy to know what your credit score and report says about your financial background. Make sure that you’ve done your homework and know your credit score and what’s on your report before sitting down with a lender. It comes back to being a knowledgeable borrower and a responsible homeowner.
If you’d like more information about a mortgage or need information on a reputable lender in the Kerrville area, give me a call!