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  • Writer's pictureRebecca Richardson

Don’t jeopardize your mortgage approval

News You Can Use

If you’re considering a home purchase you’ve likely heard suggestions on steps to take prior to purchasing a home. With an average application to closing timeline of 30 days, life and finances still go on. However it’s easy to make a move that could jeopardize your mortgage approval.

Suggestions on what not to do when applying for a mortgage:

Don’t open new credit accounts

When purchasing a new home it can be tempting to finance new appliances, furniture, etc. This isn’t advisable because prior to closing lenders are required to do a soft credit pull to confirm no new accounts. Any new credit must be accounted for on the loan application and added to the borrower’s credit report. New debt could possibly disqualify you and revoke your mortgage approval

Change jobs or pay structure

Most job changes require a paystub confirming the income for the new company and position. Since this can sometimes take several weeks it could delay closing. Moving from a salaried position to one that’s contract/commission based or quitting a job to become self-employed could cause your mortgage approval to be unapproved.

Deposit large amounts of cash

Often non-payroll deposits need to be sourced to confirm the funds aren’t gift funds. Documenting cash deposits can be difficult and could cause a hiccup if the funds are substantial and/or needed for closing.

Forget to pay your bills

Maintaining a positive credit history is important when applying for a mortgage. Keep paying your bills – even if you dispute a charge – because recent late payments on credit accounts could backfire and endanger your approval.

Ask for seller concessions that can’t be used

Sometimes in lieu of the seller making repairs they offer seller concessions (funds to pay some of the buyer’s closing costs). Prior to negotiating this speak with your lender. Loan programs have limits to seller concessions. Additionally the seller can only pay the buyer’s actual costs. For example if closing costs are $4000 and the seller agrees to pay $5000 the difference goes back to the seller and not the buyer.

It’s not practical to suspend every aspect of your life while applying for a mortgage but major changes can affect your approval. Maybe a new car and auto loan are unavoidable. Or perhaps gift funds are needed to complete the purchase. There are “right ways” and “wrong ways” to take these steps so prior to doing so, speak with your lender to ensure your approval stays on track.

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