Mortgage Mistakes to Avoid: What Not to Do When Applying for a Home Loan

What Not To Do After Applying for a Mortgage

Once you’ve applied for a mortgage, it’s important to keep your financial picture as steady and predictable as possible. At this stage, your lender has reviewed your finances, and any major changes could impact your loan approval.

Here are a few key things to avoid:

• Don’t change bank accounts – It can raise red flags and slow down the verification process.

• Don’t apply for or close any credit accounts – Any change in your credit profile can affect your score and loan eligibility.

• Don’t deposit large sums of cash – These deposits can be difficult to document and may complicate your loan file. If a family member has given you money for your down payment, you’ll need to provide your lender with a signed letter from them confirming the funds are a gift—not a loan. The lender may also request supporting documents like withdrawal and deposit slips.

• Don’t co-sign for any other loans – Even if it’s not your loan, it still affects your debt-to-income ratio.

• Don’t make large purchases – Hold off on buying furniture, appliances, or a new car. These can increase your debt or deplete your savings, and can significantly impact your debt-to-income ratio.

• Don’t miss any, or be late on, any current debt -This relates to your credit score because missing payments or making late payments can negatively affect your score.
• Don’t create job or income instability – Lenders tend to view borrowers with stable jobs and reliable income as lower-risk candidates. “If your income fluctuates or is unpredictable — for instance, if you’re in a commission-based role or self-employed — you will also need to demonstrate that your earnings are consistent enough to make your monthly mortgage payment”, says Steve Kaminski, head of U.S. residential lending at TD Bank, also based in Charlotte.

Bottom line? If you’re thinking about making any financial move—big or small—check in with your lender first. A quick conversation could save you from delays or even a loan denial.

Staying financially steady is one of the best ways to keep your home buying journey on track!

I work with a trusted network of top-tier lenders who are ready to help you take the first step toward homeownership. Reach out today—I’d be happy to connect you and get the ball rolling!