Routing # 256078446
MORTGAGE KNOWLEDGE CENTER
PenFed Mortgage with Confidence
MORTGAGE
4 Credit Mistakes to Avoid When Buying a Home
EXPECTED READ TIME: 3 MINUTES
May 21, 2021
When you're getting ready to apply for a mortgage, you want to make sure to have your credit as flawless as possible. That way, you'll have the best chance to get approved for a home loan. Plus, you have a better chance of getting a lower interest rate. Here are four mistakes smart homebuyers avoid when applying for a mortgage.
1. Not Knowing What's on Your Credit Report
Regularly checking your credit is essential. When you do that, you'll know the type of information a lender will see when you apply for a mortgage. Visit annualcreditreport.com to get a free copy of your credit report. See what the three major credit bureaus — Equifax, Experian, and TransUnion — are reporting.
Being informed helps you identify any errors that need correcting before applying for a home loan. And knowing your credit score for home buying avoids surprises.
It's also a smart idea to clean up any potential negative marks on your credit report, if possible. For instance, if you have credit card debt and can pay down some of it, do. That can reduce your credit utilization (the amount of credit you're using compared to your available credit) and help your score.
2. Waiting Until the Last Minute to Get Everything Together
Applying for a mortgage requires having your documents in order. The more organized you are, the smoother the process will go. Gather income documentation. That includes W2s, taxes, bank statements, retirement, and investment information. It's smart to have both hard and computer copies.
And most importantly, be ready and willing to give your loan officer any data they need quickly. For example, they may require updated bank statements. Or they might ask you to resubmit something again. Be flexible. As you move into the process further, the underwriter may ask for written explanations for certain things like income fluctuations or late payments.
3. Not Getting Pre-Approved
Getting prequalified or pre-approved for a mortgage is a great way to ensure you're ready when you need to put an offer on a home. When you make an offer, you'll likely need to provide documentation that you're able to pay the amount you're offering. Showing you can afford the home in question from a legitimate lender is especially vital when dealing with a competitive market.
Additionally, when your lender has reviewed your income, assets, debts, and credit, they can give you a good idea of what you might be able to borrow. It's so important to know how much mortgage you can afford. That way, you're not shopping for homes out of your price range. And on the flip side — you know your maximum borrowing power.
4. Applying for Credit Before Closing
The number one way to sidetrack getting your mortgage is to apply for more credit before your loan closes. So many borrowers get excited with the prospect of moving into their new home that they run out and buy new furniture and use a credit card or in-house financing. Or not realizing they shouldn't — they may buy a new vehicle. A large car payment or even additional small credit card payment could make it where you don't qualify.
This information is crucial if you already have a lot of debt, or your income isn't high. Before you apply for credit, use savings, or rack up your credit cards — check with your loan officer. In most cases, they will tell you to wait until after your loan closes.
We hope explaining these four credit mistakes to avoid has been helpful. Follow these, and the loan process will be much smoother and less stressful. Remember, when it's time to apply for a mortgage — we're here to help.
To learn more about PenFed mortgages or what option is right for you:
SIMILAR ARTICLES
How Much Credit Card Debt Is OK When Buying a Home?
How much credit card debt is OK to have when buying a home? PenFed Credit Union explains what you need to know about credit card debt and getting a mortgage.
Understanding Your Credit Score for a VA Loan
What are the credit scores needed for a VA loan? Can I get a VA loan with poor credit? Is a VA loan better if I have bad credit? PenFed has all the answers.
All About VA Loans and Your Credit
Learn how your credit affects getting a VA mortgage. PenFed Credit Union answers what credit score is good for a VA loan.
10 Things to Do If You Plan to Buy a House in 6 Months
Learn how to buy a house in six months, what the different types of mortgages are, the cost of homeownership, and more.
Home Buying Steps
Mortgage Products
Disclosures
1Conventional Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.0 discount point, which equals 1.0 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 75%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
2FHA Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.0 discount point, which equals 1.0 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $400,000; loan-to-value ratio of 96.5%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
3VA Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 1.125 discount point, which equals 1.125 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, conforming, fixed-rate loan. Loan amount of $450,000; loan-to-value ratio of 95%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of $995.
4Jumbo Loans
Except for holidays, rates are updated Monday through Friday at 10:15am EST. The advertised rates and points are subject to change. The information provided is based on 0.625 discount point, which equals 0.625 percent of the loan amount, and assumes the purpose of the loan is to purchase a property with a 30-year, non-conforming, fixed-rate loan. Loan amount of $1,009,000; loan-to-value ratio of 70%; credit score of 760; and DTI of 18% or less. The property is an existing single-family home and will be used as a primary residence. The advertised rates are based on certain assumptions and loan scenarios, and the rate you may receive will depend on your individual circumstances, including your credit history, loan amount, down payment, and our internal credit criteria. Other rates, points, and terms may be available. All loans are subject to credit and property approval.
Rates quoted require a loan origination fee of 1%; not to exceed $1,995. Speak to a PenFed Mortgage Loan Officer for additional details.
Fixed Rate Advance Lock-In You may lock in an Annual Percentage Rate for Advances during the Advance Period. During your Advance Period, you may choose to have three separate Fixed Rate Advances locked in at any one time, with a maximum of two new Fixed Rate Advances per calendar year. Each Fixed Rate Advance must equal or exceed Ten Thousand Dollars ($10,000.00) and you may not request a Fixed Rate Advance that would cause the amount you owe to exceed your Credit Limit. The only term option for your Fixed Rate Advance is 240 months (“Fixed Rate Advance Term”). However, the term of your Fixed Rate Advance cannot exceed your Repayment Period.
Routing #256078446
©2026 Pentagon Federal Credit Union