There are many mistakes you can make when applying for a mortgage, Today, Paula Christine and Jon are joined by Aelene Vanderveen of Cross Country Mortgage. Aelene will walk us through some common pitfalls and how to avoid them.

A mortgage calculation looks at three main categories – income, assets, credit, and collateral. The first three are largely within your control. Aelene talks about not making any large purchases or gaining a large asset while going through the home-buying process. As the saying goes, “You can’t borrow money to borrow money.” She explains what this means.

Don’t open any new lines of credit – even those department store cards that offer discounts for small purchases. That can affect your application, as can any credit pull. You may be excited to furnish your new home, but it’s best to wait. Aelene also explains why it may not be a good idea to pay off medical debt during this period. Seems counterintuitive. The bottom line, talk to your lender before making any financial moves.

We also spend some time on credit scores, what goes into it, and why your credit history and debt-to-credit ratio is crucial. In fact, during the tumult of 2008, some borrowers’ credit scores dropped, simply because credit card companies lowered their limits!

What if you’re self-employed, like Paula and Jon? Aileen says you’ll likely need your last two years of tax returns, plus a rough P&L statement for the current year.

What if you’re applying with someone else – such as a spouse or even a friend/roommate? Your lender will take the middle of the three credit scores for each applicant, and the lower one goes into the file. This is important to think about if you can get approved on one person’s income vs. two.
At the end of the day, the most important thing is to overcommunicate with your lender. If you aren’t sure about something, ask!

You can find Aelene at Cross Country Mortgage at 734-679-7000, or email her: aelene.vanderveen@ccm.com
To reach Paula, you can email her at paula@paulachristine.com or visit her website: https://paulachristine.com/