Getting Denied For Mortgage Preapproval

The quickest way for a business to lose me as a customer is to tell me something that just isn't so. For some reason, the loan officer at a local savings bank decided to assure me that the bank doesn't check with any of the three credit agencies during the pre-approval process for a mortgage. It matters to me because I did a credit freeze as soon as they became available nationwide last year, thanks to an earlier problem with identity theft. I was in the bank checking out CD terms and only decided to look into the mortgage terms on a lark.

So, I took her word for it and spent the better part of a half hour filling out their online pre-approval application. A few hours later, I got an e-mail stating that it would be denied because they couldn't confirm my credit. A couple days later, I got a letter in the mail that I'd been denied. I suppose that won't show up on my credit rating since they can't seem to access it, but who knows. Wouldn't surprise me a bit if when I go to get a mortgage at another local bank, they'll pull the denial out of some cooperative system to try to hook me on a higher rate.

What makes it so hilarious is I'm primarily interested in buying a house as a hedge against inflation. I suppose I should be grateful that the banks who were tripping all over each other last year to loan money to people without confirmed incomes are now clamping down, but they should get their story straight. In the future, I'll stick with getting pre-approval from an institution I already do business with, since they can supposedly still access my credit records as long as they are grandfathered in. And whether or not that's true, and whether or not I have to get online and do a temporary unfreeze for them at some point, the main thing is if they get it wrong, at least I'll have recourse. I can take my deposits elsewhere, something you can't do if you aren't a customer.

Cutting Losses With Stop Loss Orders

I just lost another couple thousand dollars betting against oil. The bet itself wasn't my error, nobody is right 100% of the time and I'm still aspiring to 50%. The error was not putting in a stop loss order at 95% or 90% of my purchase price. I watched the "investment" fall 25% before I sold out at a loss.

Quickly taking losses and moving on to other trades is one of the things that separates the professionals from the amateurs. Years ago, I never made a trade without immediately putting in a stop loss order, but my current online brokerage does a clunky job with them, so I got out of the habit. Bad mistake.

What makes stop loss orders so useful is they take the emotion out of the sell decision (think Art of War). Otherwise, your mind is in a continual argument with itself that the shares you thought were a good investment at $100 must surely be a good investment at $90, and how much better at $80? Before you know it, the shares really may present a buying opportunity, but it will be an opportunity for somebody else because you'll have lost all the money you can stand.

I always use stop loss orders rather than stop limit orders. If you're going to get out of a position because you're losing money, it doesn't make any sense to me to hold out for an exact price that may never materialize. In any case, I'm off to my brokerage account to make sure I have stop loss orders in place and I advise you to do the same.