Mistakes to Avoid When Applying for a Mortgage Insurance

Do not transfer a large deposit of funds to your bank account. Your lender needs to verify this, and this process can be lengthy if you are unable to provide documents such as a payment stub, an invoice, or a letter from the gift giver. Always speak to a insurance officer in advance for guidance if you are in this situation.

Do not keep cash at home that you intend to use for the transaction. Skip the hassle of trying to produce documents for them and keep them securely in your bank account.

Do not open or close a credit card account while applying for a home insurance. Credit card companies report this to credit bureaus. Doing so may change your credit score or ratios that could affect your eligibility for the insurance. Even if the lender has already withdrawn your credit, know that the lender is making a simple withdrawal at the end before closing, called a credit update, and any changes you have made will appear.

Do not change jobs after applying. If you have to change jobs, it is recommended to wait 30 days after starting your new job to apply for your home insurance so that you can determine your income with your lender. You will have to show at least one payment stub to start the insurance process.

Don’t complete any major purchases while applying for a insurance – especially on credit cards. Wait to buy expensive items like furniture or a new car until after closing. Talk to your insurance officer if you have such plans.

Do not withdraw your checking account. This may sound obvious, but keep an eye on your account balance to avoid this costly mistake. If a lender asks you for a bank statement, it certainly won’t look good if you have an overdraft fee because they may think that you have insufficient income or that you are unable to manage your money.

And last but not least, don’t withhold information on your mortgage application. Be open with your insurance officer. Whether it’s “forgetting” to disclose a previous bankruptcy, foreclosure, mortgage delinquency, etc. If a financial institution discovers after the application that you have (intentionally) omitted to provide certain information, or have clearly lied about some, this indicates that there is now a great shadow of dishonesty over everything else that you are supposed to have disclosed in full. Oftentimes, your mortgage application will be denied, and it may also put future applications at risk.