14 Things You Should NOT Do When Applying For A Mortgage
- Don't quit your job. Not at least until the loan closes and you take possession of the property. You may have the intention of switching jobs. Don't do it until AFTER you finish the whole process of purchasing or refinancing your home, or renewing a mortgage.
- Don't change your job from full-time to part time or do something that will diminish the income you stated in your application.
- Don't apply for new loans or credit cards. Don't get them even if they are offered to you for free without needing to apply.
- Don't take cash advances on your credit cards either. Some lenders "re-pull" credit reports during the loan processing time. It is even recommended that you do not use your credit cards at all until your transaction closes.
- Don't close credit/current accounts even if they have zero balances.
- Don't co-sign a mortgage or loan for someone else.
- Don't stop paying your bills on time.
- Don't spend your money set aside for downpayment and closing costs. Don't buy a car or spend on big ticket items like furniture and appliances. If you deplete your downpayment funds, it will cause problems closing on your loan. On the other hand, if it gets charged to your credit card, it can also cause problems if the lender decides to pull credit again during the process.
- Don't do anything that will trigger inquiries on your credit such as go shopping for cars or taking them for test drives.
- Don't make large undocumented bank deposits showing no reason why these significant amounts were put into your account. Lenders usually require us to verify and track your cash needed to close. Fund transfers, especially significant amounts of deposits and withdrawals, need to be properly documented as to where they came from and their purpose for being transferred.
- Don't change anything in your purchase contract without informing your lawyer and mortgage broker (or lender).
- Don't fake or modify your employment or financial documents. Your mortgage will be automatically declined once it is discovered that it has been "modified."
- Don't fail to fully disclose your status with your employer, such as if you're on probation, maternity or disability leave. Such disclosure needs to be done at the beginning of the mortgage application.
- Don't delay paying off an account required by the lenders to have zero balance. Such payments need to be verified and if you wait until closing to provide written verification, it can delay your closing.
