A recent study done by the Federal Reserve found that 1 out of 8 mortgage applications submitted are rejected.

Make sure your clients are one of the seven mortgage applicants who “get approved” by offering them these insights:

  1. Use your credit card “enough.” Credit card debt can go both ways…it can wipe out any chances your client may have to obtain a mortgage AND it can establish positive credit history by showing your client has a solid track of paying off past debts.
    1. The Consumer Financial Protection Bureau indicates there are some 45M “credit invisible” people who don’t have credit reports with the 3 major credit bureaus (Equifax, Experian, Trans Union).
    2. Stacy Titsworth, regional manager with PNC Mortgage in Pittsburg, says that lenders may use alternate data such as rent payment histories, cell phone bills, school tuitions, etc. to establish credit worthiness.
  2. Do NOT open new credit cards before and/or during the mortgage application process. Doing so may ding your client’s credit score by 5 points, according to Bailey Herzog, consumer credit expert. Suggest that your clients wait until AFTER they move into their new home before opening a new credit card.
  3. Missed medical bills can be as detrimental as unpaid credit card bills. Doctors and hospitals may submit unpaid bills to a collection agency and that debt collector may notify the credit bureau about this delinquency. The suggestion…pay off all medical bills before applying for a mortgage.
  4. Job changes may hurt your client’s ability to obtain a mortgage. Lenders like to see at least a 2-year consistent income history. Of course, if your client lost a job and recently began working for/with a new employer, that’s a good thing. Consistency is what it’s all about here. Lenders want to see a consistent history of debt payment.
  5. No lying on mortgage applications. This is a no-brainer. Tell your clients to be completely honest concerning all things related to the mortgage application process. Dishonesty on mortgage applications is called mortgage fraud and can be a federal offense.

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