Things Not to Do Before Applying for Your FHA Loan

September 28, 2023

There is plenty of advice on what to do before you apply for an FHA mortgage. You’ll need to save for your down payment, make a budget, and monitor your credit. But what about the things NOT to do before you apply?

There are the obvious ones, like not applying for a car loan while preparing for a mortgage. And, of course, not quitting your job or making big career changes while you are trying to convince a lender you are a reliable credit risk.

But there are also some not-so-obvious things to do, as we explore below.

Don’t Co-Sign on Someone Else’s Loan

Co-signing on somebody else’s loan may not feel like a big gamble. But your lender will see a potential financial obligation.

And for those who are already worried about their ability to qualify? These borrowers do well to reduce their potential debt, not increase it.

Don’t Cancel Credit Cards Even if You Pay Them Off

The age of your credit is important, and canceling a credit card does not enhance your credit scores the way some think it does. Pay down the cards, pay them off, but don’t cancel them.

Don’t Invest in Risky Ventures

Some are heavily leveraged in cryptocurrency. Others may have a fascination for day trading, penny stocks, or junk bonds.
 
But when you are applying for a major line of credit, it’s better to put your cash into safer, more stable investments to ensure you don’t suffer a major financial loss in the middle of the loan application process.

Don’t Settle for the First House You Like

Some borrowers fall in love with a house and want to buy it. That is, until they find an even more impressive property and fall in love with THAT one.

This is a common experience among a certain subset of new house hunters. It’s a smart idea to begin your house-hunting journey by window shopping for a home. Don’t plan to purchase. Just get an idea of the different options open to you.

This strategy can help you make less emotional decisions about buying a property. Any seasoned investor will tell you that emotional decision-making, at least where major investments like buying a home go, is a terrible thing to give into. Don’t make choices on any major investment until you have had a chance to consider all the angles and options.

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