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What To Avoid


Once you have been pre-approved for a home loan, you can start shopping for your dream home. However, a pre-approval is not the same as a loan approval. Much can change between the time you're pre-approved and when you actually apply for the mortgage. To stay within the parameters of your lender's pre-approval confirmation, here is some advice to help keep your credit score stable and your financial status healthy.

    Do Not Make Any Major Purchases

    While you're waiting for your final mortgage to be approved, any major purchase (either in cash or on credit) can adversely affect your credit rating, cash reserves, and debt-to-income ratio.  Avoid the temptation to buy or charge that new car or furniture before settlement, or you could risk jeopardizing your pending mortgage.

    Do Not Apply For New Lines Of Credit of Any Kind

    Every time you apply for credit, your credit score takes a hit. If your credit score changes while your mortgage is waiting to be approved, it could seriously impact the terms of your loan or even result in your home loan being denied.

    Do not co-sign for anyone, either. Even if you are not the primary borrower, the co-signed loan will appear on your credit report and treated as debt you owe, since you are legally responsible for repaying it. 

    Do Not Change Bank Accounts

    When lenders determine your mortgage eligibility, they look into your assets. Typically, they will review your accounts to see the source of your cash funding and how long it has been deposited in your bank. If you change banks, or even change your account profiles, the lender may refuse your mortgage application and you will have to reapply after your new accounts have been active for at least several months.

    Since it is likely that you'll have to show a paper trail for any funds that are not your paycheck, keep things simple and only move funds when absolutely necessary, 

    Do Not Make Any Large Deposits or Withdrawals

    Again, your lender will want to confirm your banking information and any large, or sudden, cash withdrawals or deposits will derail your final mortgage approval. If you receive any large cash gifts while you are waiting for your mortgage to be approved, report them to your bank or lender and provide a letter from your benefactor proving the money is a gift and not a loan.

    Do Not Pay Off Any Outstanding Debts

    It may seem counter-intuitive, but paying off any large outstanding debts can change a pre-approved home loan to a denial. Calculating credit scores is extremely complex, and any change in your credit profile (good or bad, up or down) can cause a lender to reevaluate your pending approval and force you to begin the process all over again.

    Change In Employment

    Your employment history and current income is evaluated in the approval of your loan. If there is any change in employer, employment status, salary, bonus, hours, etc. you must notify your lender of these changes immediately.

    Check With Your Loan Officer

    Additional documents may be required prior to your mortgage closing. Respond to document requests promptly. Missing documents could delay your loan's approval, and could even delay your settlement, too. Your licensed mortgage Loan Officer will let you know if any documents will be needed when you close on your new home, and will work closely with you during the mortgage process.

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