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Things to Avoid After Applying for a Mortgage

Things to Avoid After Applying for a Mortgage

Congratulations! You’ve found a home to buy and have applied for a mortgage! You’re undoubtedly excited about the opportunity to decorate your new home, but before you make any large purchases, move your money around, or make any big-time life changes, consult your loan officer – someone who will be able to tell you how your decisions will impact your home loan.

Below is a list of Things You Shouldn’t Do After Applying for a Mortgage. Some may seem obvious, but some may not.

1. Don’t Change Jobs or the Way You Are Paid at Your Job. Your loan officer must be able to track the source and amount of your annual income. If possible, you’ll want to avoid changing from salary to commission or becoming self-employed during this time as well.

2. Don’t Deposit Cash into Your Bank Accounts. Lenders need to source your money, and cash is not really traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.

3. Don’t Make Any Large Purchases Like a New Car or Furniture for Your New Home. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher debt to income ratios…higher ratios make for riskier loans…and sometimes qualified borrowers no longer qualify.

4. Don’t Co-Sign Other Loans for Anyone. When you co-sign, you are obligated. As we mentioned, with that obligation comes higher ratios as well. Even if you swear you will not be the one making the payments, your lender will have to count the payments against you.

5. Don’t Change Bank Accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is consistency among your accounts. Before you even transfer any money, talk to your loan officer.

6. Don’t Apply for New Credit. It doesn’t matter whether it’s a new credit card or a new car. When you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO® score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.

7. Don’t Close Any Credit Accounts. Many clients erroneously believe that having less available credit makes them less risky and more likely to be approved. Wrong. A major component of your score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both of those determinants in your score.

Bottom Line

Any blip in income, assets, or credit should be reviewed and executed in a way that ensures your home loan can still be approved. The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature. They are there to guide you through the process.

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10 replies
  1. Alice Carroll
    Alice Carroll says:

    Thanks for pointing out that having changes in my method of income can cause complications for me home loan purchase. Even though we can’t have a wedding yet, I feel like it’s about time that my boyfriend and I settle down together. As such, getting a new home that would eventually be fully ours would be a good prelude to a new chapter of our lives together.

  2. Eli Richardson
    Eli Richardson says:

    I’m glad you talked about how it’s important to avoid making large purchases after you applied for a mortgage. Recently, my wife and I decided we’re ready to start looking for our dream house. After checking our finances, we think we’ll need to apply for a loan, so we’ll be sure to follow your advice. Thanks for the tips about what to do when applying for a home loan.

  3. Chris Pederson
    Chris Pederson says:

    Thanks for clearing up how a co-sign will obligate you and your lender will count payments against you. That kind of scares me honestly. I don’t want my home loans to ruin my credit so I’ll wait until I can sign on my own.

  4. King
    King says:

    Things to Avoid After Applying for a Mortgage is really a unique topic which has been brought by you in this article. Not to change jobs or the way we are Paid at our job, not to deposit cash into our bank accounts, not to make any large purchases like a new car or furniture for our new home, not to co-sign other loans for anyone, not to close any credit accounts, not to apply for new credit, not to change bank accounts these ideas have been suggested. Thanks for sharing.

  5. Max Jones
    Max Jones says:

    Thanks for the tip avoid changing from salary to commission when applying for a mortgage. My wife and I are thinking of applying for a mortgage by the end of the year, but there is the possibility of my job changing within the next few months. I’ll consider my job options before I apply for a mortgage loan.

  6. Ashish
    Ashish says:

    I really liked your blog, it really helped increasing my knowledge for things to avoid, especially, not applying for new loans or changing jobs, when we are in mortgage process.

  7. John Carston
    John Carston says:

    It really helped when you said that carefully planning your documents is important when buying a home. My uncle told me that he is planning to buy a house using a mortgage loan, and he asked if I have any idea what is the best option to do. You did a great job of explaining, I’ll be sure to tell him that it will be much better if we consult a trusted mortgage loan company as they can answer all his inquiries.


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