Pre-Mortgage Moves People Recommend (2024)

2. Having Low Expectations

This mistake is subtle but all too common. It’s possible to qualify for a mortgage with a surprisingly low credit score, even with a bankruptcy or foreclosure in your history. You won’t get the best terms, but you won’t necessarily be disqualified.

When shopping for a mortgage with poor credit, it’s easy to assume you’ll only get approved for a loan with bad terms. Don’t let a bumpy credit history keep you from shopping multiple lenders, asking for improved terms, or walking away from a deal that’s not right for you. Go in with realistic expectations, but don’t resign yourself to accepting a terrible loan.

Bad example: You take an expensive, problematic first offer because you believe you’re lucky to get approved at all.
Even worse example: You alter or lie about your financial history to get a better loan. This is a felony.
Good example: You shop around to multiple lenders for multiple offers, then compare them just like you would if you had a perfect credit history.
Important exception: For some credit situations, a single stipulation like mortgage insurance might be mandated.
See also: Don’t forget that a wide range of federal, state, local and nonprofit programs exist to help people get mortgages who wouldn’t usually qualify for them. Shop these options as well to help get the best loan possible.

3. Consolidating Debt

We need to be clear here. The right debt consolidation move can be perfect for your credit and your mortgage if you do it right. It reduces your usage of existing credit cards while also freeing up money every month to pay down existing loans. The trouble with debt consolidation and mortgages is timing.

If you shop for a mortgage too soon after consolidating debt, any credit checks and new accounts your consolidation required will show up and reduce your score. If you use a credit card balance transfer offer to make it happen, the percentage of use on that card could be high enough to skew your numbers.

4. Slacking Off After Initial Approval

This mistake is common because people don’t fully understand how mortgages work. With most loans, once you’re approved, the lender never looks at your credit again. You drive away with your new car or get your new credit card in the mail, and as long as you make your payments on time, nobody worries.

A mortgage deals with much more money than any other loan you’re likely to get in your life. Because of this, the lender will usually check your credit twice. The first time they check will be when they approve your loan, but they’ll look again just before signing. If your credit has taken a severe dive in between, they can cancel the deal.

Bad example: You use credit cards to buy all the furniture you’ll need for your new house a day or two after getting approved.
Even worse example: You miss your current mortgage payment in between approval and signing.
Good example: You continue to build your credit strategically and carefully until your mortgage has been funded fully.
Important exception: In some cases, it can be beneficial to set up a home equity loan/second mortgage in that interim space. Check with your loan officer or mortgage broker before doing this, however.
See also: Avoid committing to any long-term expenses in the time between getting your mortgage and settling into the new payment. This will make a significant change to your monthly cash flow, and you should fully understand it before taking on new commitments.

5. Getting Other Credit Accounts

We’ve touched on this in passing, but the concept is so important it needs its own section. Applying for new credit accounts hurts your credit score for up to a year after the application. This is especially true if you apply for many accounts or deny even one of those applications.

It’s understandable why some people feel like this is a good move. The decision to buy a home or refinance naturally makes you think about your overall credit and finances. That thinking might lead to wanting other new loans to help position you. This is incredibly tempting if debt consolidation might improve your credit or finances.

All that is true, but it doesn’t change what setting those new accounts up can do to your credit score and, thus, the price of your mortgage. Wait to make those moves until after you’ve signed.

Bad example: You shop for a personal loan to help reduce credit card balances in the months before applying for a mortgage.
Even worse example: You apply for multiple credit cards in the six months before you apply for a mortgage.
Good example: You apply for no new loans except the mortgage in the year leading up to buying a home.
Important exception: Several loan applications all at once (usually within 14 days) for a mortgage, or home equity loan typically count as a single loan application. That behavior represents responsible shopping, and lenders are aware of this.
See also: One hack for improving credit without these applications is to get a family member or good friend with excellent credit to add you to one of their credit cards as an authorized user. You don’t even have to use the card. Their activity goes on your credit report.

6. Checking Your Credit Report Too Late

A recent Consumer Reports investigation found that 34% of Americans found at least one error on their credit reports. Those errors can cost you a mortgage approval entirely or make your mortgage thousands of dollars more expensive. You should check your credit report regularly, and especially if you’re considering a big credit move.

But you have to check it early. Reporting, proving and removing an error can take months to resolve. Wait too long, and the error will be there when lenders check your credit. Even if it gets fixed the day after signing, your mortgage terms will already have been set.

Bad example: You check your credit score while you’re beginning to shop for a mortgage.
Even worse example: You check your credit report only after getting denied for a mortgage.
Good example: You check your credit report a year ahead of time, then manage errors immediately and consistently.
Important exception: There are no exceptions to this rule. You should check your credit report every year and keep tabs on your credit score consistently.
See also: Many banks and credit cards offer credit report monitoring as a free part of their online services. This tool can help you keep track of your score, but it only helps if you monitor the alerts and follow up on anything that doesn’t seem right.