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What Not to Do After Applying for a Home Loan: Essential Tips from Mel and Zack Durham, Olympia Real

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Applying for a home loan is a significant step in your home-buying journey. As real estate agents who have guided many clients through this process, we’ve seen firsthand how certain actions, even unintentional ones, can jeopardize your chances of getting approved for a mortgage. Here are some crucial things not to do after applying for a home loan:

1. Don’t Make Large Purchases

While it might be tempting to start shopping for furniture or a new car, it’s essential to hold off until after your mortgage closes. Large purchases can alter your debt-to-income ratio, potentially disqualifying you for your loan. Even if you plan to pay cash, avoid significant expenses that could deplete your savings or emergency funds.

2. Don’t Apply for New Credit

When you apply for new credit, whether it’s a credit card, personal loan, or financing for a purchase, it results in a hard inquiry on your credit report. This can lower your credit score and raise red flags for lenders, who may view it as a sign of financial instability. Keep your credit profile as consistent as possible from the time you apply for your mortgage until after your loan closes.

3. Don’t Close Any Credit Accounts

You might think closing a credit card you no longer use is a good idea, but doing so can negatively impact your credit score by affecting your credit utilization ratio and the length of your credit history. Both are important factors that lenders consider when evaluating your loan application.

4. Don’t Change Jobs or Careers

While career advancements are usually positive, changing jobs or switching careers during the loan process can complicate your approval. Lenders prefer to see job stability, and any significant change in your employment status can delay the approval process or lead to a denial. If a job change is unavoidable, inform your lender immediately.

5. Don’t Make Large Deposits Without a Paper Trail

If you receive a large sum of money, such as a gift or a bonus, avoid depositing it into your bank account without clear documentation. Lenders are cautious about unaccounted-for deposits and may require proof of the source. Without proper documentation, these funds could be excluded from your available assets or raise concerns about your financial stability.

6. Don’t Co-Sign for Another Loan

Co-signing a loan for someone else means you’re taking on the responsibility for that debt, which increases your liabilities and affects your debt-to-income ratio. Even if the primary borrower makes all the payments, lenders will still count the co-signed debt against your financial profile, potentially jeopardizing your mortgage approval.

7. Don’t Ignore Your Credit Score

Continue monitoring your credit score throughout the home loan process. Any unexpected changes, like a late payment or an increase in credit card balances, can hurt your score. Be diligent about paying bills on time, keeping balances low, and avoiding any actions that could negatively impact your credit.

8. Don’t Skip Payments or Make Late Payments

It’s crucial to stay current on all your existing financial obligations. Missing a payment or making a late payment can severely damage your credit score and raise concerns for your lender about your ability to manage debt. Set reminders or automate payments to ensure you don’t miss any due dates.

9. Don’t Make Any Financial Decisions Without Consulting Your Lender

If you’re considering any financial moves—whether it’s paying off a loan, opening a new account, or transferring funds—always consult with your lender first. They can advise you on the potential impacts and guide you on the best course of action to avoid jeopardizing your loan approval.

Final Thoughts

The period between applying for a home loan and closing on your new home is a critical time where your financial behavior is under close scrutiny. By avoiding these common pitfalls and maintaining open communication with your lender, you’ll help ensure a smooth approval process and move one step closer to owning your new home.

If you have any questions or need personalized advice, feel free to reach out to us—Mel and Zack Durham, your trusted real estate partners in Olympia, Washington. We’re here to help you navigate the home-buying process with confidence and ease.

Mel & Zack Durham

EXP Realty | PNW Homes Group

360.481.2073

melandzack@pnwhomesgroup.com

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