Six Ways to Avoid Losing Your Mortgage After Pre-Approval

Compiling paperwork for a mortgage application often can seem a bit overwhelming, as lenders must document every bit of your income to build a case that you will be able to repay the loan. So, after all is said and done, you definitely don’t want your loan to fall through. To help avoid that from happening, offers some tips to make sure the process runs smoothly.

1. Watch your spending

Avoid racking up more debt or making any big purchases. Now isn’t the time to shop for new furniture or to get a new car. Balance increases can have a negative impact on your approval when lenders track your credit usage during the mortgage-application process.

2. Don’t borrow from your credit card for the escrow deposit

This can set off a big red flag for lenders, because it appears as if you’re already borrowing money to make a payment.

3. Keep cash deposits to a minimum

You might think that you need to fluff up your bank balances before applying for a mortgage. But, if you’re going to do this, you probably don’t want to use cash. Each of your large deposits needs a source, and cash can be seen as too mysterious. Each deposit must be accounted for when a loan underwriter reviews your bank statement.

4. Don’t change jobs, and maybe even stall a promotion

Accepting a new job, becoming self-employed or even garnering a promotion with a lower base and higher commission all could put your mortgage into jeopardy. Almost every type of loan requires a two-year history of commissions, bonuses and overtime.

5. Avoid getting another loan

Hold off on obtaining any other loans or lines of credit, as adding more credit to your profile may make you appear riskier to potential lenders. You also want to be upfront about any loans you’ve co-signed. Failure to disclose that you’re a guarantor on another loan can dramatically affect your debt-to-income ratio.

6. Stay married

The mortgage process can be stressful, and sometimes a spouse is unaware that their partner is planning to file for divorce in the midst of it. Doing so during the loan process could potentially ruin the mortgage application. A divorce could mean an income split, or having to pay alimony or child support—all extra expenses that may have to be noted on the application.

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