10 Mistakes to Avoid During the Mortgage Process
"Act like you're broke. Don't spend a penny." - Jen Corso
Introduction:
When you're buying a home, your finances are closely monitored by your lender from pre-approval through closing.
Many buyers assume small financial decisions won’t matter — like moving money between accounts, opening a store credit card, or making a large purchase. Unfortunately, even small changes can delay your loan or cause your mortgage approval to be denied.
The best advice during the mortgage process is simple: act like you're broke and keep everything the same until closing.
Why Your Finances Must Stay the Same During Mortgage Approval.
With that said, here are 10 important things to avoid while going through the mortgage process.👊
1. Don’t Co-Sign for Any Loans
Don't co-sign on any loan. Technically, any type of loan. Don't co-sign on an auto loan, college loan, or mortgage loan. If your brother says, "Please help me buy a car." Nope. Don't do it. Wait, until after you buy a home if you still feel generous. Remember, if they don't pay, you are the co-signer and still responsible for paying the loan.
2. Don’t Move Money Between Bank Accounts
Adding money or taking money out of your bank accounts that you had given your bank can change your loan-to-value ratio and actually slow down or stop the process of getting a loan. I've seen it happen and the buyer had to trace back where the money came from and why it was added to their bank account. The only money coming in should be income and go out by paying your bills.
3. Don’t Open or Close Credit Cards
I know you're not even considering that getting a membership at Costco and wanting to open up a new Costco credit card can hurt you. Just don't. Wait. If you do, even if you don't buy anything, now there is an open credit card on your credit. And yes, they do check before you close.
4. Don’t Max Out Credit Cards
Maxing out your credit card is not good. You need to show that you can use a credit card at a minimal but not use up all the credit. It makes you look like you need to put everything on your card. Also, paying off your credit card every month, helps increase your credit score. At least pay the minimum amount required. Never be late. Rumor has it, that lates fall off, but I do see them for decades on people's credit.
5. Don’t Make Large Purchases
This is a pet peeve of mine. I've had buyers wanting to buy a car, boat, and furniture, knowing that they are very close to not affording a home. Sometimes they even go on vacation while under contract. Spending money that is needed for buying a house is essential for getting a mortgage. Also, when you go on vacation you tend to spend a lot of money plus it's hard to be available for certain things like home inspections, negotiations, and getting your final lender conditions.
6. Don’t Change Your Income Structure
So, you are rocking it at your work, and they are giving you a better position and pay. Awesome! But not. Take the promotion but ask if they can hold off giving you the extra income. I know it sounds silly because you can actually afford even more of a home, but as I said, the lenders go from the first day of all your assets and financial information. This has happened with one of my buyers. Luckily, she got the memo to hold off of any bonus income until after they close. It also happened with another buyer, which did not get the memo, and the lender had to pre- approve them again with a different amount, which held out on a home they were trying to close on.
7. Don’t Miss Any Payments
Just pay your bills, credit cards, loans, if you currently have a mortgage, on time. Don't miss any payments. Don't even be late. If you think you are going to have lates, then maybe rethink buying a home. Forgetting to pay a bill is not an excuse the bank wants to hear.
8. Don’t Quit or Change Jobs
This sounds really obvious, but don't quit your job or switch job. I've actually had buyers say that they don't like their job and was going to quit to go into another field. I told them you might not want to buy a home then. If it was a cash buyer, then I wouldn't care as long as they have the cash and extra to live on. Lenders need to see a work history for at least the last 2 years consistently in the same field.
9. Don’t Let Multiple Lenders Pull Your Credit
When getting a mortgage your lender will pull your credit to see what debt you have. Make sure you talk to different banks, lenders, and credit unions before they pull your credit. Going to multiple banks, getting multiple credit cards, any place that pulls your credit will ding your credit. If you are looking to get your credit pulled once, then I would suggest going to a broker. They will pull your credit once and shop with multiple lenders to get you the best interest rate.
10. Don’t Deposit Large Unverified Funds
Considering I've already said just don't touch your bank account, don't make large deposits. I've had buyers get checks in their birthday cards and put them in the bank. This is another red flag to the lender because it looks like income and they want to know if you are hiding money somewhere. You will have to provide proof of where the funds came from and may delay the process.
If you're thinking about buying a home in the Chicagoland and Fox Valley areas, understanding the mortgage process can help you avoid costly mistakes.
I help buyers prepare for homeownership and navigate the buying process with confidence.
If you’re unsure whether you’re financially ready to buy, let’s create a plan that works for you.
📩 Contact me here:
www.jencorso.com
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The Author is Jennifer Corso - Realtor. This article is for informational purposes only and reflects Jennifer Corso’s professional experience working with home buyers and sellers.