8 “Must Nots” During The Home Loan Process

Apr 18, 2021 • Our Blog
8 “Must Nots” During The Home Loan Process

If you are in the process of applying or getting approved for a mortgage, we created a quick list of the top 8 items to avoid during the home loan process:


Do Not Buy or Refinance A Car

Buying or refinancing a car has the most significant potential to derail your mortgage loan from closing. If you need to purchase a new car, ensure that you talk with your loan officer before doing so. Buying or refinancing can potentially lower your credit scores and increase your overall Debt-to-Income Ratio. Your lender will monitor your credit until you close on the loan, and these new inquiries or increased liabilities will get noticed.    


Do Not Stop Paying Any Bills

Please continue to pay all your bills on time. Whether it is a housing expense or your cable bill, they all can mark your missed payment with credit reporting agencies and submit your account to collections. This would drastically impact your credit and have the potential to deny your loan.


Do Not Quit Your Job

Your income is one of the essential elements in your loan’s approval. If you quit your job or make any adjustments to your hours, it is likely to affect your loan. Before making any drastic changes to your employment, consult your loan officer and see how this may affect your ability to close.  


Do Not Negotiate Without A Realtor ®

Negotiating a purchase contract without a Realtor® is one of the most common first-time homebuyer mistakes. While it may be intimidating to schedule time with a Realtor®, it will make your entire home buying experience smoother. Without Realtor® representation, you may:

  • Negotiate a home for much more than it is worth which you will need to cover the difference at the closing table
  • Buy a home that needs significant work to be deemed as livable
  • Buy a home that will not qualify for the type of loan program you will need
  • Sign the purchase agreement incorrectly


Do Not Make Large Cash Deposits

Large cash deposits will be flagged by underwriters and need to be documented. Alert your loan officer ahead of time if you may be expecting large deposits of cash into your bank account from a gift, sale of a vehicle, or family loan that is being repaid.  


Do not Buy All of Your New Furniture Yet

While it may be tempting to purchase all new furniture, we suggest waiting until you have signed and closed on your home. This is the most common time when we notice borrowers sign up for credit cards when they should not, and it can cost money to store this furniture if you have not yet moved into your home.  


Do Not Break Leases

If you fall in love with the perfect home, do not call your landlord and start to break your lease without consulting your loan officer first. You may experience delays in the home search or mortgage process and find yourself without housing.  


Do Not Spend Your Down Payment/Closing Costs

We recommend that you set aside the funds for closing costs and down payment. This money will need to be transferred at the closing table, and you will not close on your home without it.  

If you have any questions about the mortgage process or what it takes to get started, click here and speak with a qualified professional today.