Welcome to the definitive guide for all prospective homeowners! I’m Collette Horton from Liberty Star Mortgage, and today, we’re delving into the essential principles that every buyer should follow when venturing into the realm of real estate and mortgages. These rules aren’t just suggestions—they are the cornerstone of a smooth and successful home buying experience. So, let’s explore the “10 Commandments of Mortgage” that will guide your journey from pre-qualification to closing day.

1. Thou Shalt Not Venture into the Marketplace of Homes without Pre-Qualification

Embarking on your home buying journey without pre-qualification is like sailing into uncharted waters without a map. Pre-qualification gives you a clear understanding of your budget and shows sellers that you are a serious and prepared buyer. It sets the stage for a smoother, more efficient house-hunting experience.

2. Thou Shalt Not Purchase Shiny Baubles Before Closing

It’s tempting to start buying furniture or appliances for your new home, but big purchases on your credit card or taking out new loans can jeopardize your mortgage approval. Lenders monitor your finances up until closing day, so keep your spending in check and avoid large transactions to ensure nothing disrupts your final loan approval.

3. Thou Shalt Not Conceal Thy Debts

Honesty is the best policy, especially when applying for a mortgage. Disclosing all your debts upfront allows your lender to accurately assess your financial situation and provide the best loan options for you. Concealing debts can lead to complications and even denial of your mortgage application.

4. Thou Shalt Not Play Shell Games with Thine Finances

When you’re in the process of securing a mortgage, stability is key. Moving money between accounts, or making unusual deposits and withdrawals, can raise red flags with lenders. Keep your finances consistent and transparent to avoid unnecessary scrutiny and questions.

5. Thou Shalt Not Deceive Thy Loan Officer with Tall Tales

Accuracy in your loan application is crucial. Falsifying employment history, income, or assets can lead to severe legal consequences and potential mortgage denial. Always provide truthful and accurate information to your loan officer.

6. Thou Shalt Not Submit False Documents, Forgeries, or Falsehoods

Integrity in your documentation is just as important as honesty in your application. Submitting any falsified documents can be considered fraud, which not only jeopardizes your loan but can also have legal repercussions.

7. Thou Shalt Not Neglect Thy Credit Report and Procrastinate Thine Payments

Your credit score plays a significant role in your mortgage terms. Regularly review your credit report for accuracy and continue making all payments on time. Maintaining good credit habits will help secure favorable loan conditions.

8. Thou Shalt Not Ignore Thine Budget and Spend Money Thou Hast Set Aside For Closing

Stick to your budget and remember the additional costs associated with closing. It’s easy to underestimate expenses like closing fees, moving costs, and home repairs. Ensure you have sufficient funds to cover all closing costs without dipping into reserves you might need for unexpected expenses.

9. Thou Shalt Not Enter into Co-signer Agreements Before Closing

Becoming a co-signer on another person’s loan or asking someone to co-sign for you before your mortgage closes can alter your debt-to-income ratio, potentially affecting your loan approval. Wait until after closing to make any commitments that could impact your financial profile.

10. Thou Shalt Not Hastily Pay Off Collection Accounts

While paying off debts is generally positive, doing so right before applying for a mortgage might not always be beneficial. Consult with your loan advisor to determine the best strategy for dealing with collection accounts and other debts in relation to your mortgage application.

By adhering to these 10 commandments, you ensure that your journey to homeownership is as smooth and successful as possible. Remember, the path to your new home is paved with preparation, honesty, and wise financial choices. Happy house hunting!