An approval of the final mortgage can be delayed or jeopardized by new loans, large purchases, job changes, or large, unexplained bank deposits.
Once you’re preapproved for a mortgage, you’re well on your way to financing a home. The road still has a long way to go, and if you’re not careful, it will get bumpy.
An offer of preapproval is based on an evaluation of your credit, income, debt, and assets. The offer might not stand if those things change significantly before final approval.
Before your loan closes, do not:
Up until the loan is closed, you can have your credit checked. If there are negative changes, the deal may be altered or even torpedoed. As you apply for other credit lines and loans, your credit score can be impacted, and you will accumulate more debt, which affects your debt-to-income ratio, which lenders consider when you apply for a mortgage.
Stay on top of your bills. One of the most important factors in your credit score is the payment history. Late payments on credit accounts for more than 30 days hurt your score.
Furniture, appliances, and other high-end household items can be tempting to buy in preparation for homeownership.
By paying cash, you will deplete your savings, and charging substantial purchases will increase your debt-to-income ratio and credit utilization. To maintain good credit, experts recommend keeping credit utilization under 30%.
You should generally wait to make big purchases until after you close on your mortgage.
You probably can’t control this, but you should avoid changing jobs during the loan approval process. Your income might change if you change careers, and your loan amount could change as well.
A large deposit may indicate recently borrowed money and a higher debt-to-income ratio to a loan underwriter. This could mean that some consumers would have a harder time qualifying for a mortgage.
An officer who sees large deposits, typically exceeding $1,000, must be able to track the origin. Account transfers and payroll deposits can be handled without difficulty, but anything unclear needs to be clarified.
Your mortgage offer can be altered or revoked if you make a major change to your income, assets, or debt. Ask your loan officer for advice if you are not sure how a certain action might affect your application.