LIST: Things You Should Not Do After Applying For A Mortgage

You're doing it! You're one step closer to buying your home. Even though you've been pre-approved, you're not in the clear until closing documents are signed. This means, one hasty misstep and you could put your loan status at risk. With such a big purchase coming, you're undoubtedly tempted to start making those big purchases to complete your home, or move your money around for safe keeping. These are all things that could impact your home loan. Below is a list of things you shouldn't do after applying for a mortgage to avoid putting your home loan in jeopardy before closing day.

1. DON'T MAKE LARGE DEPOSITS/WITHDRAWALS 

Part of your approval process includes providing your lender with recent bank statements. Any large sum of money coming in and out of your account raises some eyebrows and could be ground for a halt on processing your application. It's also important to note that cash is not easily traceable. You should discuss the proper way to document any "have-to" money transfers with your mortgage officer prior to doing so.

2. DON'T CLOSE CREDIT ACCOUNTS

You want to have good credit, yes. Many people are under the impression that closing off extra accounts will make them look like a more stable candidate for approval. Closing accounts (even the ones not in use) reduces your available credit and raises your debt to income (DTI) ratio. A portion of your credit score relies heavily on both the length and depth of your credit history. 

3. DON'T MAKE LARGE PURCHASES ON CREDIT

Large purchases, say to furnish your new home, actually raise your DTI. In other words, new purchases come with new monthly responsibilities and higher debt to income ratios create riskier loans. This means someone who once qualified for approval, now raises a red flag to lenders. Do continue to build your line of credit as usual with smaller, typical purchases you are more than able to pay off each month.

4. DON'T CHANGE JOBS

You may be wondering how changing from one source of income to another could have an effect on your mortgage qualification in any way. Proof of a steady, consistent income is vitally important. It's also pertinent that you're remaining in the same industry as you were when you applied. Consistency across the board throughout the entirety of the mortgage approval process is the key to approval.

5. DON'T CO-SIGN OR PAY OFF COLLECTION ACCOUNTS

When you co-sign for someone, you are essentially agreeing to be that individual's safety net. Regardless of your intent to make their payments or not, your lender is required to count those payments against you. Additionally, when you make payments on older collection accounts, it actually makes that account "current" and can drop your credit score.  If a payment is nearing its mark to expire based on the date of your last payment, it's actually best to leave that payment alone.

Of course, this is not a comprehensive list and there are additional safety steps to take in order to ensure you are not putting your chance for mortgage approval at risk. Always consult with your mortgage officer if you're unsure of what you can and cannot do between approval and closing day.