1. Taking on additional debt just before or after applying for a mortgage loan. You cannot imagine how often this happens. A home buyer talks to a mortgage broker and gets a preapproval. The borrower finds a house and officially applies for a mortgage. During this time period, the borrower feels the loan is basically approved, subject to the appraisal. He or she decides to go shopping for a new car, boat, or furniture.. The new purchases now appear on the credit report as new debt. Shortly before closing, the lender will run another credit check. One or two things now place the loan approval at risk. Either the qualifying ratios are now too high or the credit score is too low, or both. The loan may still be approved, but the interest rate may be higher and a larger down payment may be required. If the borrower had just waited until the loan had closed, they would not placed the loan in jeopardy.

2. Changing jobs or careers before or after applying for a mortgage. Lenders want to see two years or more of work experience on a job. Changing jobs too often could signal instability. In some cases, changing jobs may not effect the loan. If the applicant had been stable at his prior job but left for more money, it probably will not cause the loan to be declined. However, changing careers altogether make lenders uncomfortable. This could place your loan approval at risk.

3. Trying to build a down payment by missing payment on debts. Some new home buyers think they can simply skip a payment or two on other debt to cover the down payment or some of the closing costs. They lender will discover this when they check your bank accounts or on the final credit check. You may have just killed any chance of getting a loan for an extended period of time.

4. Paying late on an existing mortgage. Let's say you applied to refinance your existing mortgage. The appraisal was fine and you are confident you will be approved. Your mortgage broker tells you they can close the loan in two or three weeks. You decide to not to make your mortgage payment that is due shortly, because it will be paid off at closing. Your loan is approved but later than you anticipated. A day before closing the lender makes another credit check and finds that you are 30 days past due on your mortgage. Late payments on mortgages are worst than being late on a car loan or on credit cards. Your loan is now at risk of being declined.

5. Paying late on other debt pending an equity loan. Sometimes borrowers think they can stop paying on other debt because they have been approved for a home equity loan. Although the debt will be paid off at closing does not mean you can skip any scheduled payments. At best this practice will lower your credit score. Alternatively, you may have to pay a higher interest rate or at worst your loan may be declined.

6. Knowingly reporting false information. Some loan programs do not require income verification. If you overstate your income to get a loan you cannot afford, you are more likely to have trouble making payments later. Falsely stating your income to qualify for a mortgage is illegal. You could find yourself in serious trouble, so do not do it.

7. Deciding on a mortgage based solely on the interest rate. The loan with the lowest interest rate is not necessarily the best loan for you. A broker can arrive at a lower rate by charging you more points. Some loans have closing costs that make a loan less attractive, despite the lower interest rate. Some loans have lower payments even though the interest rate may be slightly higher. Today, there are interest only loans, 40 year loans, adjustable rate loans that start as low as 1%, and so on. Some of these programs have payment that are up to 50% lower than a traditional 30 year mortgage. What if a borrower went with one of the programs and invested the payment differences in a security that averaged 8% over a 15 year period. They may find themselves better off than if they went with the loan with a lowest interest rate.

What's my point? When deciding on a mortgage program, compare monthly payments, points, other closing costs, prepayment penalties, interest rate ceilings, etc. All these factors must also be considered before you can arrive at the best loan for you.