Your mortgage isn’t a ‘sure thing’
until you sign the closing papers. Until that point, anything can happen, which
is why it’s so important to keep your financial and employment situation status
quo.
If you’re thinking about buying a
home or are in the middle of the process, here are five things that could make
you lose your loan approval.
Changing Jobs
When lenders approve you for a
mortgage, they do so based on your employment and income. They assume your
employment will remain the same, even though we all know that’s not always the
case.
While changing jobs after you close
on your loan isn’t a big deal, changing jobs mid-loan process could cause a
delay in processing or even cause you to lose your loan approval.
Hurting your Credit Score
Lenders pull your credit when you
apply for a mortgage and again before you close. If your score changes
drastically during that time (for the worse), you could lose your loan
approval. Once pre-approved, try keeping your credit the same by not opening new
accounts, missing payments, or racking up too much credit card debt.
Making Large Purchases
After you apply for (and are
approved) for a loan, hold off on any large purchases until after you close
your loan. Making large purchases, especially on credit, can cause you to lose
your loan approval.
Here’s why.
If you bought on credit, you either
opened a new credit account or increased the debt on an existing account. This
can hurt your credit score and increase your debt-to-income ratio, which can
hurt your chances of approval.
Making Large Deposits or Withdrawals
in your Bank Account
Large deposits or withdrawals in
your bank account are red flags to lenders. A large withdrawal means you spent
money and might have more debt or less money to put down on the home than you
were approved for.
Large deposits could signify that
you borrowed money from someone or took out a loan. A new loan (even if from
friends or family) is a debt that affects your debt-to-income ratio. Therefore,
if you increase your DTI, you could lose your loan approval.
Not Providing Requested
Documentation
Even if you’re pre-approved for a
mortgage, underwriters always need more information. If they ask for documentation, and you can’t or don’t provide, they won’t be able to clear your loan
conditions. This could cause them to decline your loan.
Final Thoughts
Mortgage approval isn’t official
until you close on your loan. In the meantime, it’s crucial to keep your
information as stable as possible. If you can help it, make sure your credit
score doesn’t change, your bank account stays the same, and you don’t change
jobs or income.
With everything status quo, you have
a better chance of qualifying for and closing your loan. If you have questions
about what might affect your loan or need to get pre-approved, contact me
today.
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