You’ve done everything right, saved for a down payment, built your credit, and now you’re under contract to settle on a new home. These 14 items listed below could cause your purchase to go sideways.

  1. Don’t change jobs, quit your job, or become self-employed just before or during the loan process. Your mortgage lender craves job stability and reliability of income for the distant future, so changing jobs before you close on your new home would send up red flags. Obviously, quitting your job during the process wouldn’t go over very well. Lenders like to see 2 years of tax returns, so this also applies if you’re in business for yourself.
  2. Don’t lie on your loan application. Not only is this just wrong, it’s also called loan fraud and the penalties are steep.
  3. Don’t buy a car. There are three major categories that a lender is going to look at when approving you for a loan: Credit, Assets, and your Debt-to-Income Ratio. Purchasing a new vehicle will likely affect all three of these items for most people.
  4. Don’t lease a new car. Banks treat lease payments like any other debt and, most of the time, there is a fair amount of money that needs to be put down in order to lease a car. You want all of your money and credit available at least until you close on your home.
  5. Don’t get credit card happy. This goes along with obtaining new credit. You want your debt-to-income to be the same or better when you are nearing closing day. Do your best to not add any additional debt on your cards.
  6. Don’t apply for a new credit card. New inquiries for credit confuse mortgage lenders, and they throw up major red flags. Your credit score will be checked again just before closing to make sure that everything is the same as when you were approved. Because new credit translates into a higher risk to the lender, it’s best to wait until after closing before establishing new credit.
  7. Don’t close existing credit accounts. While this may sound like a good idea, it’s not while trying to get a mortgage because it could lower your credit score. If you do close a credit account, you are reducing your available credit. So, if you have balances on other cards, your percentage of credit “utilization” is going to increase.
  8. Don’t ignore lending requirements. There are two people that you have to satisfy when getting a home loan: the appraiser and the underwriter. The underwriter who is working your loan may require a number of documents in order to give you a “clear to close”. Give every effort to getting them what they need in order for your loan to close on time.
  9. Don’t co-sign a loan for anyone. Even though you’re not making the payments for this loan, it’s a risky financial move whether you’re getting a mortgage for yourself or not. Of course, your lender would have to factor these other loan payments into your debt-to-income ratio.
  10. Don’t get behind on bills. Paying your bills on time is a track record of responsibility, so skipping a bill or having to make a late payment strongly affects you being able to secure a mortgage loan.
  11. Don’t spend your savings. There are a number of expenses that your cash will have to go towards, like your down payment, closing costs, inspections, appraisal, etc. The lender may also require a certain amount of cash reserves in addition to that, so unless you’re loaded, go easy on your savings.
  12. Don’t buy big ticket items on credit. You’ve been fully approved, inspections are over, and you are a couple of weeks away from closing. You’re feeling great and find out that the furniture store down the street is having an 80% off sale. Resist the urge to splurge! Remember, the underwriter is going to check your credit standing just before closing, so wait until after closing to avoid any hiccups.
  13. Don’t panic if the appraisal for your new home comes in low. Every once in a while, we see a situation when the appraisal comes in lower than the sales price. While this could be problematic, it’s not the end of the world and there can be resolutions. Since getting an appraisal is a contingency for obtaining a loan, the seller would have to drop the price of the home or you could get out of the contract. You could also pay more for the home or meet somewhere in the middle with the seller.
  14. Don’t be alone. If you’re working with a realtor, they can actually take a lot of the burden off of you by scheduling inspections, negotiating repairs, and communicating with your lender and the title company. They are there to take some of the weight off of your shoulders and make things run as smooth as possible. It’s our job.