What Not to Do After You Apply for a Mortgage

Applying for a mortgage is a significant step toward owning your dream home, but the journey doesn’t end with the application. Ensuring your financial profile remains stable is crucial during the approval process. At Nexus Home Inspections, we want to help you navigate this critical period successfully. Here are key actions to avoid after applying for a mortgage to ensure a smooth approval process.

1. Don't Make Major Purchases

Resist the temptation to buy new furniture, a car, or any big-ticket items. Large purchases can affect your debt-to-income ratio and deplete the savings you'll need for closing costs and moving expenses. Lenders monitor your financial activity up until closing, and significant purchases could jeopardize your loan approval.

2. Don't Apply for New Credit

Applying for new credit cards or loans can negatively impact your credit score and suggest to lenders that you are taking on additional debt. Each application results in a hard inquiry on your credit report, which can lower your score and raise red flags for your lender.

3. Don't Miss Payments or Pay Late

Continue to pay all your bills on time. Missing a payment or paying late can damage your credit score, making you appear financially unreliable. Lenders want to see that you manage your existing credit responsibly.

4. Don't Switch Jobs or Careers

While it may be tempting to accept a new job offer, especially if it promises better pay, changing jobs during the mortgage application process can complicate things. Lenders prefer to see job stability, and switching jobs can disrupt the verification of your employment and income.

5. Don't Close Any Credit Accounts

It might seem logical to close unused credit accounts, but doing so can actually hurt your credit score. Closing accounts can increase your credit utilization ratio, which is the percentage of your available credit you are using. A higher utilization ratio can negatively impact your credit score.

6. Don't Make Large Deposits Without Documentation

If you receive a significant sum of money, such as a gift or bonus, be prepared to explain and document it. Lenders will scrutinize large deposits to ensure they are legitimate and not borrowed funds, which could affect your debt-to-income ratio.

7. Don't Cosign for Anyone

Cosigning a loan makes you financially responsible for that debt. If the primary borrower defaults, you're on the hook for the payments. This additional liability can increase your debt-to-income ratio and negatively impact your mortgage approval.

8. Don't Ignore Your Lender's Requests

Promptly respond to any requests from your lender for additional documentation or information. Delays in providing what they need can stall the processing of your loan and potentially lead to a denial.

Conclusion

Securing a mortgage is a delicate process that requires careful financial management and stability. By avoiding these common pitfalls, you can improve your chances of a smooth and successful mortgage approval. At Nexus Home Inspections, we're here to help you every step of the way on your journey to homeownership. For more tips and guidance on home buying and inspections, visit our blog or contact us directly. We're committed to making your home-buying experience as seamless as possible.