Getting your mortgage pre-approved is no easy feat. But it doesn’t guarantee anything yet. If your credit conditions change, your lender might still reconsider their decision. At this point, a single misstep can cost you your future.
To avoid sabotaging your future investment, steer clear of these mistakes after getting pre-approved.
Missing bill payments
Missing bill payments will not just affect your credit score. It may also lead your lender to question your ability to handle regular mortgage payments.
Pay all your bills on time and steer clear from any overdrafts. Consider having payments automatically billed to your credit card so that you won’t overlook any deadlines.
Making undocumented deposits
While nothing is stopping you from receiving cash gifts or adding to your assets, make sure you properly document the income source. Include a gift letter from your donor to verify their legitimacy. Lenders may reconsider your home loan approval if you’re caught relying on unverified sources to meet your financial obligations.
If you receive a bonus or are considering cashing in some certificates, contact your lender as soon as possible. They can advise you regarding proper documentation.
Changing your employment situation
Avoid changing jobs voluntarily after a pre-approval. You’ll have to go through all the trouble of verifying your employment again. You’ll also need to present at least one pay stub to prove your new income level, which could further put off your settlement.
Opening new credit accounts
New accounts directly impact your credit score. Taking on additional debt at this point may increase your risk of non-payment.
Should you open more accounts during this time, inform your lender as soon as you can. Be ready to explain how you plan to manage these accounts.
Making large purchases
Try to put off buying costly items at least until everything’s finalized with your home loans. While it may be tempting to start buying furniture or appliances for your new home, the increased debt may affect your chances of closing the property you’re eyeing. Remember, more debt raises your debt-to-income (DTI) ratio. The lower your DTI, the better your chances of being approved for a mortgage.
Paying in cash isn’t advisable, either. As much as possible, try not to touch the cash reserves that were computed during the pre-approval process. Consuming your available cash and your lender question your ability to settle your remaining balances.
Paying off debt obligations
Settling existing balances may backfire if it ends up affecting your DTI ratio and draining your cash reserves. Your lender will also need to know where you got the money and may even reconsider your creditworthiness.
Delaying lender requests
If your lender requests for a particular document or recommends something specific, respond quickly and follow their instructions. Being prompt and responsive shows that your credibility and trustworthiness. Following their advice can also prevent any delay in the settlement process.
Getting pre-approved takes you one step closer to homeownership. That’s why you need to be more careful than ever with handling your money. Focus on your goals, and keep communication lines open between you and your lender. Every deposit and payment you make during this time will have an impact on your ability to close the deal.