12 Things You Shouldn't Do After Mortgage Pre-Approval

12 Things You Shouldn't Do After Mortgage Pre-Approval

You got pre-approved.

You found the house.

Your offer was accepted.

Now you can finally relax, right?

Not quite yet.

One of the biggest misconceptions buyers have is believing that once they're pre-approved, their financing is finished.

Your lender may continue verifying information throughout the mortgage process, and financial changes between pre-approval and closing can create problems.

Until you have closed, funded and received the keys, be careful with your finances.

Here are 12 things I want my buyers to avoid.

1. Don't Finance a New Car

This is probably one of the most famous mortgage mistakes.

You're getting ready to move into your beautiful new house, so you decide the old car has to go too.

Please wait.

A new car payment can change your debt-to-income ratio and potentially affect your mortgage qualification.

Even if the dealership tells you the payment is affordable, talk to your mortgage lender before taking on new debt.

The house comes first.

The shiny new SUV can wait in the parking lot a little longer.

2. Don't Open New Credit Cards

That furniture-store promotion may sound tempting:

"No interest for 24 months!"

Opening a new account can affect your credit profile.

Wait until after closing before applying for new credit unless your lender specifically tells you otherwise.

3. Don't Buy Furniture on Credit

I understand the temptation.

You already know exactly where the sectional is going.

But financing thousands of dollars in furniture before closing can create a new monthly obligation.

Take measurements.

Save screenshots.

Build your shopping cart.

Just don't hit the finance button without talking to your lender.

4. Don't Run Up Your Credit Card Balances

You don't have to open a new account to create a problem.

Increasing balances on existing credit cards can also affect your credit utilization and monthly obligations.

Try to keep your finances stable throughout the mortgage process.

5. Don't Close Credit Accounts Without Asking

Buyers sometimes think closing an old credit card will improve their mortgage profile.

It may have unintended effects on your credit.

Don't make major changes to existing credit accounts without first discussing them with your lender.

6. Don't Change Jobs Without Talking to Your Lender

Sometimes a great career opportunity appears at exactly the wrong time.

Changing jobs doesn't automatically mean your mortgage will fail.

But employment and income are major parts of underwriting.

A change from salaried employment to commission income, self-employment, contract work or another compensation structure could affect how your income is evaluated.

If you're considering a job change, call your lender before making the move.

7. Don't Quit Your Job

This one should be obvious, but it happens.

Mortgage approval is based partly on your ability to repay the loan.

Your lender may verify employment again before closing.

If you're frustrated with your boss, give yourself a closing-day countdown.

Then make your career decisions after speaking with the appropriate professionals.

8. Don't Move Large Amounts of Money Around Without Documentation

Mortgage lenders need to document certain funds used in the transaction.

Moving money between accounts can create additional questions and paperwork.

If you're planning to transfer a significant amount of money, ask your lender how they want it handled and what documentation you'll need.

9. Don't Make Large Unexplained Deposits

Your lender may need to verify the source of certain funds.

If a large deposit suddenly appears in your bank account, be prepared to document where it came from when required.

If someone is helping you financially with the purchase, tell your lender before moving the money so they can explain the proper process for your loan program.

10. Don't Co-Sign for Someone Else

Your cousin needs a car.

Your child needs an apartment.

Your friend promises they'll make every payment.

You may still become legally responsible for the obligation when you co-sign.

That can potentially affect your mortgage qualification.

During the home-buying process, don't co-sign new debt without discussing it with your lender first.

11. Don't Miss Payments

Keep paying your existing bills on time.

Don't assume that because you're about to close on a house, a late credit-card or auto payment won't matter.

Protect the credit profile that helped you obtain your pre-approval.

12. Don't Make Major Financial Decisions Without Calling Your Lender

This is the simplest rule.

If you're wondering:

"Could this affect my mortgage?"

Call your lender before doing it.

It's much easier to ask a five-minute question than to solve a financing problem three days before closing.

Your Credit May Be Reviewed Again

Don't assume the credit report used for your initial pre-approval is the last time your financial situation will be reviewed.

Lenders have processes for confirming borrower information before closing.

Your goal is simple:

Keep your financial picture as stable as possible.

Your Employment May Be Verified Again

Employment verification can also occur during the loan process.

If anything changes involving your:

• Employer

• Hours

• Salary

• Commission

• Bonus

• Employment status

tell your lender.

Don't wait for underwriting to discover it.

What About Buying Appliances?

Ask first.

If you're paying cash for a refrigerator, for example, removing several thousand dollars from the bank account you're using for closing could affect your available funds or reserves.

If you're financing it, you're potentially creating new debt.

Either way, wait or ask your lender.

What About Paying Off Debt?

This one surprises people.

Paying off debt sounds like something your lender would automatically want you to do.

Sometimes it may help.

But don't make assumptions.

Your lender may have structured your approval based on specific balances, assets and reserves.

Ask before making a large payoff.

Continue Sending Documents Quickly

During underwriting, your lender may request updated documents.

Respond promptly.

You may be asked for things such as:

• Updated pay stubs

• Bank statements

• Explanations

• Insurance information

• Additional documentation

A request for another document doesn't necessarily mean something is wrong.

Mortgage underwriting involves verification.

Don't Spend Your Closing Money

Keep the funds you've planned for closing available.

Remember that you may need money for:

• Down payment

• Closing costs

• Prepaid expenses

• Moving

• Immediate household needs

Don't drain your accounts because the loan officer gave you good news.

Wait Until the Transaction Is Finished

There will be plenty of time after closing to buy furniture, replace the car or open a home-improvement account.

For now, protect the mortgage.

You've already done the hard work.

Don't accidentally create a problem during the final stretch.

Final Thoughts

Mortgage pre-approval is an important milestone, but it isn't the finish line.

From pre-approval until closing, try to keep your:

• Employment stable

• Credit stable

• Debt stable

• Bank accounts documented

• Closing funds available

And when you're unsure, ask your lender before making the financial move.

It's one of the easiest ways to protect your path to closing.

About Marysol Calvillo

I'm a real estate broker helping buyers throughout Katy, Cypress, Hockley, 77084, 77095 and the greater Houston area navigate the home-buying process from financing and home search through inspections, appraisal and closing.

I believe buyers make better decisions when they understand what's happening before it happens.

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Getting ready to buy your first home? Let's create your plan before you start house hunting. I'll help you understand the buying process and connect you with trusted professionals so you know what to expect from pre-approval all the way to getting your keys.