Avoid These 9 Things After Applying for a Home Loan

Whether holding off on major purchases or keeping your credit strong, being cautious now ensures a smoother path to homeownership.  

This blog outlines nine important things to avoid after applying for a home loan, helping you navigate the process confidently and secure your dream home. 

Why is it Important to Use Caution After Applying for a Home Loan? 

Once you've applied for a home loan, you must tread carefully with your finances. Think of it like when you're planning a big trip—you want everything to go smoothly, right? After you've booked your flights and accommodations, you wouldn't want to suddenly splurge on a bunch of new stuff or make any significant changes that might throw off your plans. 

Applying for a home loan is kind of like that. Lenders want to see that you're financially stable and reliable. So, it's a good idea to keep things steady until everything is finalized. That means holding off on any major purchases or decisions that could shake up your financial situation. 

All the Things to Not Do Before Closing Day 

Congratulations on making progress towards purchasing your first home! As you approach the closing day, it's crucial to maintain financial stability and avoid potential pitfalls that could impact your home loan or mortgage approval.  

Here are 9 essential tips to keep in mind: 

1 | Avoid Depositing Large Amounts of Cash 

It's advisable not to deposit large sums of cash into your bank accounts while your mortgage application is processed. Stick to regular income deposits and consult your lender for guidance on handling any unusual deposits. 

2 | Maintain Stable Bank Accounts 

Keep your bank accounts stable during home-buying to streamline verifying your assets and income. Changing accounts could delay the approval of your mortgage. 

3 | Refrain from Significant Purchases 

Before closing, refrain from making major purchases such as a car or furniture on credit. Such purchases can alter your debt-to-income ratio and potentially impact your loan approval. 

4 | Ensure Employment Stability 

To reassure lenders of your financial stability, maintain stability in your employment and income sources until after closing. Avoid changing jobs or how you receive payments during this critical time. 

5 | Avoid Co-Signing Other Loans 

Steer clear of co-signing on loans for others, as it could increase your debt obligations and affect your creditworthiness. This may lead to changes in your credit profile that could impact your mortgage approval. 

6 | Stay Away from New Credit Applications 

Avoid opening new credit accounts or applying for additional loans before closing. Doing so can alter your credit score and debt levels, potentially affecting your mortgage terms or approval status. 

7 | Keep Your Credit Accounts Open 

Maintain your existing credit accounts rather than closing them. Closing accounts can affect your credit utilization ratio and credit history length, both of which are important factors in mortgage approval. 

8 | Ensure Timely Payments 

Make all payments on time, including bills, loans, and credit cards. Timely payments are crucial during the mortgage approval process to maintain a positive credit score and secure your loan. 

9 | Notify of Marital Status Changes 

Inform your lender of any changes in marital status, such as getting married or divorced. Significant life changes can have financial implications that might affect your mortgage application. 

The One Thing You Should Do: Communicate Changes with Your Lender 

Throughout the process, communicate any changes or uncertainties with your lender promptly. They can offer guidance on how certain decisions may impact your mortgage approval or closing timeline. 

These tips, when followed diligently, can help you navigate the home-buying process more smoothly and enhance your chances of securing your dream home. If you have any questions or need further clarification, don't hesitate to consult with your real estate agent or lender for personalized advice! 

 
CITED: Assurancemortgage.com, Abt.bank, Keepingcurrentmatters.com