Once your mortgage application is submitted, you’ll want to avoid negatively impacting your loan pre-approval in any way. Mortgage companies look for stability and consistency, and you are responsible for maintaining your financial situation through to loan closing. Here are some simple do’s and don’ts to follow while your loan is in the process:
Don’t apply for new credit
New credit inquiries can negatively impact credit scores. Depending on the elements in your current credit report, a credit score can drop as much as 15 points for a single credit inquiry.
Don’t make large purchases
This is especially true if the mortgage company wants verification of down payment monies and closing funds. You’ll also want to avoid making large purchases on your credit cards since this can impact your credit scores. Use credit modestly during the loan process and avoid significant credit purchases. Balances exceeding 30 percent of the total available credit line can bring credit scores down. This includes transferring debt from one card to another, which will impact the full available credit per card. Wait until after closing to buy that new fridge or washer and dryer.
Don’t close credit accounts
Closing a credit card will adjust the total amount of available credit, which will impact credit scores. Also, closing a card may affect other factors to your score, such as the length of your credit history.
Do sign up for credit monitoring
This will help you watch your credit from shopping to closing. For a small fee, the credit bureaus and other companies offer monthly monitoring services to inform you of any new credit activity that may impact your scores. Credit monitoring is especially helpful in detecting the first signs of identity theft.
Do pay bills on time
Stay current on existing accounts and avoid any late bill payments.
Do let your loan officer know if you’re planning on changing employment
Changing your employment right before or during the mortgage financing process may cause some delays. It’s important to let your loan officer know about any plans to change your employment to ensure a timely closing.
Finally, stay in touch with your loan and real estate professionals
Consult your mortgage or real estate professional with questions about whether a specific action can affect your loan pre-approval during the loan process.