What not to do once you get approved for a home loan

Started the loan process? Congrats, this is a big step for you! Did you happen to get approval? No way! You are one step closer to owning a home! Just because you have approval doesn’t mean you are free and clear. Don’t be like Fred, the dummy who got approved, but then had his loan canceled from any one of his silly actions.  

Don’t buy a car (or other large purchases) 

Fred was so excited about his loan approval he decided to buy a car to celebrate.   Don’t be like Fred! As fun as it is to treat yourself, you need to be patient. Your loan has been approved based on your current circumstances. Adding more debt by financing a car not only makes you a bigger loan risk but also changes your monthly debt obligations. Even if you buy the car in cash it could still mess with your approval. Because that cash could have been used for your down payment and might have been earmarked for your loan approval. So, make sure you don’t go out and make any large purchases after getting your loan approval. 

Don’t change banks 

Fred felt so invigorated about being approved for a house loan he decided to find other ways to improve his life as well. He decided to change banks because he found one with a better savings rate. Don’t be like Fred! You can always change banks once you are settled into your new home. The last thing you want to do is unsettle the loan process by changing lenders, affecting your credit score, or adding more people to an already intricate process. 

Don’t quit your job 

Fred couldn’t believe he actually got approved for a loan. He feels like a new dummy. In fact, Fred feels like the department store doesn’t appreciate all the time he has spent working the front window. He wants to try something new and promptly quits to become a crash dummy because it sounds more adventurous. Don’t be like Fred! You may not like your job or might even have a better opportunity come your way, but you need to be patient. Your loan approval is locked on a specific time of your life and took into account your earnings, savings, and job history. If you get offered a better job, please talk to your loan officer. They will be able to help you navigate the situation. Because changing jobs could affect your loan approval because the bank sees this as unstable.

Don’t accept large gifts 

Fred was so excited about his loan approval he told all his friends and family. His proud grandparents gifted him $10,000 to help out. Fred promptly deposited the money into his bank account and was devastated to find out that his loan had been paused due to “questionable deposits”. Don’t be like Fred! Large cash deposits are questionable and make banks uncomfortable with approving loans, especially if the cash is seen as a way to fund the loan. Banks love long work histories where income can be tracked. If you are gifted any money by friends or family be sure and give your loan officer a heads up and ask them how best to deposit the money. 

What to do during the loan process

Once you apply for a loan the waiting can be hard and uncertain. It can be easy to make one of the many mistakes as displayed by Fred. Here are three tips to keep in mind during the approval process to maximize your chances at approval and a smoother closing.

Tip 1: Be careful with your personal information

The loan process requires you to share a lot of sensitive and personal data. Don’t go applying for a loan at multiple places at once. It is hard to keep track of who needs to know what and it is easy to give your information away to the wrong people. Most lenders have secure methods of sending your information. Applying to multiple lenders at once can also affect your ability to get approval.

Tip 2: Have a point of contact

Most lenders provide you with a go-to person for all your questions and needs. This provides a smoother approval process and increases the chance of approval while also keeping communication clear. If you are unsure of where you are in the process or what else is needed on your end just reach out to your point of contact to touch base. This also protects your information. If you are ever asked to share your information with a new person clarify with your contact before sending it.

Tip 3: Handle funds appropriately

Keep track of your money during the approval process. Lenders are looking for stability. If your monthly bank statements are irregular or suspicious it could raise a red flag. If you are gifted money from family be sure to document the transaction and notify your agent before you deposit funds. Don’t touch your down payment amount for any reason.  Be as frugal as possible to provide stability during the loan process.  

Good luck

Applying for a loan can be scary and exciting. You are opening the door for your biggest purchase. And you don’t want to sabotage your chances of homeownership because of a silly mistake. So, be patient and know that your real estate agent and loan officer are great resources for you during the whole process.