Dos and Don’ts After Getting Pre-Approved for a Mortgage
Getting pre-approved is just the first step in buying a home, the following information is a list of dos and don’ts once it has been pre-approved. These tips will likely help you secure better financing terms and also avoid self-sabotaging your homeownership dreams.
WHAT NOT TO DO:
1: DO NOT ACQUIRE A NEW CREDIT
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The bank will re-execute your loan just before closing.
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New credit inquiries will lower your credit score and will also need to be explained. If new credit is extended, the new payment will need to be verified and your debt-to-income ratio will need to be readjusted for the increased debt.
2: DO NOT INCREASE YOUR DEBTS
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Large purchases can affect your closing chances.
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Using cash will deplete your cash reserves, which may be a factor in your approval. Making a large purchase on credit will increase your debt and may result in your debt-to-income ratio becoming inadequate when recalculated.
3: DON’T BREAK YOUR CREDIT
A pre-approval is based on your credit; income and assets at the time of issuance.
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Do not close your accounts
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Don’t miss out on payments
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Do not incur credit inquiries
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Don’t Increase Your Credit Balances
4: DO NOT MAKE LARGE DEPOSITS
All assets must be tracked on paper, so no cash can be used to close. If you can’t track the paper money, as far as the bank is concerned, the money doesn’t exist.
5: DO NOT CO-SIGN FOR LOANS
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If you jointly sign for someone, the debt will reflect on your credit and the new debt will negatively affect your debt-to-income ratio.
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If you can provide canceled checks for a minimum of 12 months that reflect payments that come directly from the co-signer’s account, the payment may be skipped.
6: DO NOT LEAVE OR CHANGE YOUR JOB
Your work will be reverified with your employer just before closing. Obviously, if you are not working, your income will be nullified. If you are starting a new job, you will need pay stubs to prove income.
7: IGNORE LENDER APPLICATIONS
When your loan officer requests a document, follow their instructions. Provide all documents with all pages, even if they are blank, as soon as possible to avoid delays.
TO DO:
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Fax or email all requested documents immediately and include all pages, even if they are blank
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Keep all new pay stubs and bank statements in a folder in case you need them so they are easily accessible
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Keep paying all your debts and loans on time