Keep Your Mortgage Approval On-Track : 6 Behaviors To Avoid

6 Things To Avoid While Waiting For A Mortgage Approval

When you’re buying a home, there are two stages in the home loan approval process.

Stage 1 starts when a you submit a mortgage application to your loan officer for a pre-approval.

A pre-approval is a “walk-through” mortgage approval that says — at a given purchase price and downpayment amount — the home loan application will very likely be approved.

Stage 1 ends when the you sign a purchase contract on a home. At this point, the “walk-through” approval is useless. This is because you now need a real home loan approval, not just a sample one.

Thus begins Stage 2.

During the second phase of the approval process, a mortgage underwriter reviews income, assets, credit, job history, plus other items; the underwriter’s job is to make sure you meets the bank’s lending criteria.

If your loan officer did his job in Stage 1, Stage 2 is often just a formality. And most times, Stage 2 goes according to plan¬† Sometimes, though, a homebuyer will sabotage his approval by changing his “risk profile”. It doesn’t happen on purpose, of course — it just happens.

So, consider this a quick primer of what not to do while you’re between Stage 1 and the completion of Stage 2 of the home loan approval process.¬† If you follow these rules, you can help keep your risk profile consistent, and your loan approval on-track.

  1. Don’t buy a new car or take larger lease paymens
  2. Don’t quit your job or change industries
  3. Don’t transfer large sums of money from your bank accounts
  4. Don’t miss a payment to a creditor (even if you don’t think you owe it)
  5. Don’t open a new credit card
  6. Don’t accept a cash gift without a formal gift letter

There’s other items, too, but this a good start.

Now, avoiding these mistakes may not be practical for everyone. Therefore, if you think you’re about to violate a “rule”, check with your loan officer first.

There are a lot of “gotchas” in mortgage lending and it helps to have professional guidance for your individual questions.

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