5 Common Mistakes to Avoid After Applying for a Mortgage

Becoming a homeowner is an exciting investment. After you apply, it may feel like you’re in the clear and it’s time to celebrate. There are still moving parts that can affect your loan before closing. To ensure your mortgage goes through without a hitch, we recommend avoiding these actions.

1. Changing Bank Accounts

Because the loan process requires a 2-month history of reserve funds, opening new financial accounts near a closing date may void this history. New bank accounts will not have the 2-month history available and cannot be used. This may result in loan closing delays or denials.

2. Closing any Credit Accounts

Many buyers believe having less available credit makes them less risky and therefore more likely to be pre-approved. Closing an account may hurt your credit scores. A major component of your score is based on the length and depth of your credit history and your total usage of credit as a percentage of available credit.

3. Making Large Purchases on Credit or Making Late Payments

You may feel like celebrating once you’ve applied for a mortgage, but experts recommend against retail therapy or big purchases, such as a new car, furniture, or appliances for your new home. New debt and changes to your credit are likely when making big purchases. This can directly affect your debt-to-income ratio (DTI), potentially decreasing your credit score, and possibly disqualifying you from your loan. Also, late payments of any kind can decrease your credit score, increase your home loan interest rate, delay loan closing, or cause loan denial. It’s best to wait until after your loan closes and you’ve paid all of the costs associated with your home loan.

4. Changing Jobs

Your employment information is one of the significant factors a lender investigates when you apply for a mortgage. Lenders will track any changes to your annual income. If possible, refrain from changing jobs or the way you’re paid at your job. A change in your job status will cause your file to be re-underwritten and reconsidered. This may cause a delay with your loan process or a possible denial of your loan application.

5. Co-signing Other Loans

Co-signing means you’re agreeing to pay off someone else’s debts when that person fails to make payments. While this is a generous act, remember that you’re still obligated. During the loan process, changes to your credit report or status could negatively affect your ability to close your loan on time or at all.

The mortgage process can be confusing, but Homestead Funding makes it easy. Whether it’s your first time buying a home or you’re investing in another, our Loan Originators are there for you every step of the way. If you’re ready to talk about your home financing needs, contact us today.