19 Dos and Don'ts to Protect Your Mortgage Loan Approval

If you’re in the process of purchasing a home, there are many ways you can unintentionally derail your mortgage approval—even after your offer has been accepted. It’s crucial to navigate this period carefully to ensure you make it to the closing table without any issues. To help you stay on track, here are 19 essential dos and don'ts during the loan process that could impact your credit and overall loan approval.

Do These Things:

1. Continue Paying Your Bills on Time – A single late payment can negatively impact your credit score and delay your approval process.

2. Keep Your Employment Steady – Lenders want to see stable employment, so remain in the same company or industry throughout the loan process.

3. Maintain Sufficient Cash Reserves – Your lender may require you to show that you have adequate funds for closing costs and reserves.

4. Communicate with Your Lender – If you have any financial changes or concerns, always discuss them with your loan officer first.

5. Provide Requested Documents Promptly – Delays in paperwork submission can slow down your loan approval and even put your closing at risk.

6. Continue Using Your Credit Responsibly – Avoid drastic changes in spending habits that could raise red flags with your lender.

7. Keep All Large Deposits Documented – If you deposit large sums of money, be prepared to explain and document their source.

8. Follow Your Lender’s Instructions Carefully – Every situation is unique, and your lender’s guidance is crucial to a smooth approval process.

9. Stay in Touch with Your Real Estate Agent – Your agent can guide you through the process and help keep everything on track.

10. Review Your Closing Disclosure Carefully – Before closing, double-check all loan details to ensure there are no surprises.

Don’t Do These Things:

11. Don’t Apply for New Credit – Avoid opening new credit cards, auto loans, or financing purchases, as this can impact your credit score and debt-to-income ratio.

12. Don’t Make Large Purchases on Credit – Buying furniture, appliances, or even a car on credit before closing can affect your loan approval.

13. Don’t Co-Sign a Loan for Anyone – Taking on additional financial obligations can alter your debt-to-income ratio and raise concerns for your lender.

14. Don’t Make Large Unverified Bank Deposits – Any unexplained large deposits can delay your loan approval as lenders will require documentation.

15. Don’t Switch Banks or Move Money Around – Stability is key. Keep your financial accounts consistent to avoid extra documentation requirements.

16. Don’t Close Any Credit Accounts – Even if you’re paying off debt, closing accounts can lower your credit score and impact your approval.

17. Don’t Miss Any Credit Card or Loan Payments – Even one missed payment can hurt your credit score and raise red flags for your lender.

18. Don’t Change Jobs Without Talking to Your Lender – Even if it’s a promotion, a change in employment can delay or derail your approval.

19. Don’t Ignore Your Lender’s Requests – If your lender asks for additional information, provide it as soon as possible to keep the process moving smoothly.

Final Thoughts

Buying a home is an exciting journey, but staying disciplined during the loan process is essential. By following these dos and don'ts, you’ll help ensure that your mortgage loan remains on track and you reach the closing table without unexpected obstacles. If you have any questions about the homebuying process, The Murrey Group is here to guide you every step of the way!