A significant number of homeowners have a mortgage on their home and that number has been steadily increasing each decade since 1960. Recent research reports that less than 30 percent of Americans own their homes free and clear.  Because that number has been dramatically declining from the 1960s, when it was over 42 percent, lenders and borrowers have shifted their thinking and low down payment mortgages have been the dominant force in the industry over the last decade or more.

Here are some straightforward things you should NOT do if you have any intention of applying for a home mortgage loan.

• Buy a new vehicle – with a loan. If you shift your debt-to-income ratio too much you will likely be denied for a loan.

• Credit cards -never “max out,” pay late, pay only the minimum, overuse and open or close credit card accounts.  Each of these could lower your chances.

• Omit debts or other financial obligations from your application.  Lenders can easily find out information on ALL your debts, so “forgetting” about one or more could be a reason for rejection.

• Make any “large” financial transactions, deposits or withdrawals. Loan officers become skeptical when large deposits or withdrawals from accounts show up on the financial data they review.

• Co-sign a loan for someone.  This will also shift for debt-to-income ratio in the wrong direction.  Even though you haven’t spent a cent, it’s viewed as your debt.

• Apply for, or originate, any type of service, credit or other loan.  Even utility, cable and other services can shift your ratios because each generates a credit “inquiry”. Too many of those can make lenders uneasy.

• Start your own business. Or, for that matter, quit or change jobs.  This also makes lenders concerned.  They view work stability as a standard.  Other than that can be another strike against you.

• Change banks.  Not only demonstrates stability, but makes it easier to provide the papers (and you will have to produce plenty) that your application requires.

• Save less cash than is required to close the loan. It always seems like so many people are surprised when the closing costs are even slightly more than the estimate statement.  Often they are.

While lenders are pretty fickle these days about approving loans, if you recall recent economic history, they have good reasons.  Getting in contact with a lender well in advance (seriously, well in advance) to determine what you’ll need to do and using these “DON’Ts”, you should be on track for a smooth ride to a mortgage and the American Dream.

Deon Cannon is an Associate Broker with RE/MAX Pure and can be reached at 770-528-9655.