So, you’ve been pre-approved for a mortgage—congrats! You might think the hard part is over, and you can now focus on finding that perfect home. But the truth is, being pre-approved isn’t the same as being fully approved for a loan. There’s still more to do before your lender gives you the final green light. Between now and the day you close, it's crucial to keep your financial situation in check, because even a small misstep can jeopardize your ability to secure the mortgage.
To help you navigate this critical time, here’s my list of 10 things you absolutely should NOT do before buying a home:
1. Don’t Spend Your Savings
You'll need every bit of that cash for your down payment and closing costs. Even after your pre-approval, your lender may double-check your cash reserves, so avoid big purchases—like furniture or appliances—until after closing.
2. Don’t Change Jobs (If You Can Help It)
Switching jobs during the mortgage process can delay or even cancel your loan approval. Lenders verify your employment before closing, so if you're no longer at your job, your loan could be put on hold. Even if you get a raise, many lenders require at least two pay stubs from your new employer before moving forward.
3. Don’t Miss Any Payments
Your credit score is largely based on timely payments. Lenders often pull your credit again right before closing, so make sure you’re up to date on all bills to avoid any issues that could affect your approval.
4. Don’t Move Money Around
Your lender will review your bank statements during underwriting. If large transfers or withdrawals appear without explanation, you’ll need to provide a paper trail. Avoid moving money between accounts unless absolutely necessary, and try to do this before the pre-approval process begins.
5. Don’t Close Credit Lines
Closing a credit account can increase your credit utilization ratio, which negatively impacts your credit score. Hold off on closing any credit cards or lines of credit until after your home purchase is complete.
6. Don’t Apply for New Credit
Opening new credit accounts, such as a credit card or car loan, can lower your score and raise red flags for your lender. Even a few points lost on your credit score can affect your mortgage approval, so avoid applying for anything new until after closing.
7. Don’t Co-Sign a Loan
When you co-sign a loan, you’re responsible for that debt, and it will count toward your debt-to-income ratio. This additional obligation could impact your loan approval and limit your borrowing power.
8. Don’t Keep Your Lender in the Dark
Make sure to communicate any significant changes—like employment status, financial situation, or life changes—to your lender immediately. This will help prevent last-minute surprises that could delay your closing.
9. Don’t Take Expensive Trips
Big-ticket travel purchases like flights or hotel stays can increase your credit card balances and affect your debt-to-income ratio. Plus, your lender may need paperwork quickly, and you don’t want to be stuck on vacation without access to it.
10. Don’t File for Divorce
Divorce proceedings can halt the mortgage process until a final settlement is reached. Lenders need to know how assets are divided before proceeding, which can take months and delay your home purchase.
A Few Extra Tips!
The real estate landscape is always changing, so here are a couple more tips to keep in mind before closing:
Don’t Make Major Life Changes – Thinking of starting a new business or making a major investment? Hold off until after the home purchase, as it could impact your loan.
Stay Organized – Keep all your financial documents handy. Lenders often request additional documentation quickly, and being prepared can make the process smoother.
Ready to start the journey to homeownership? Reach out to the Danielle Dimond Team today and let’s make your dream home a reality!