Mistakes to Avoid After Applying for Your Home Loan

Getting a home loan, while not a complicated process, can be made so if you’re not on your toes when the lender starts their work in earnest.  Many homebuyers will walk with grace through the process while others will hit some snags along the way, and it’s not uncommon even for the most prepared homebuyer to run into a few hurdles along the way.

However, there are definitely some things you can do to avoid making matters more difficult which often means knowing some information before you start applying for a mortgage.  Here’s our list of mistakes to avoid after applying for your home loan.

Get Your Financials in Order

Before you start applying for a mortgage, it’s important that you have your financials somewhat in order.  Don’t worry, the lending process will help you tie up or tidy up any loose ends or answer any questions, but there’s plenty you can do beforehand to simplify and expedite the process.

Make sure you have a solid understanding of what you earn and what you have saved and make sure that all of your finances are transparent.  Lenders will leave no stone unturned when it comes to vetting you as a borrower.  After all, a lender’s job is to assess the financial risk of you as a borrower and whether or not you’re a worthy risk.

If you’re planning on using investments or gift money as part of your down payment or income, then consider moving those assets into liquidity for easy access and transparency.  Perhaps you’re using other funds from sources in foreign accounts.  Make sure that anything that could be a potential stumbling block is tidied up early in the process or before you apply for a loan.

Keep Things in Place

Lenders don’t like to see money, credit, debt, or accounts flying around in the months leading up to your loan application.  Unless you have a very good reason to make significant financial changes to your current status,  it’s best to keep things as they are for the time being.  If you’re unsure about an account or an asset, speak to your loan officer about how best to handle it.

In other words, try not to move money around in significant amounts if you can avoid it, but if you must move funds around, do so in a transparent way (i.e. bank transfers).  Avoid making big changes that can throw up red flags such as making big deposits that were otherwise unaccounted for.  Lenders are not only looking at your finances, but they’re also making sure your money is “clean”.

Avoid Big Life Moves

During the lending process, making a big life move can be the downfall of getting a loan.  Quitting or starting a new job, making significant alterations to your lifestyle, and generally doing anything that can cause a lender to be concerned for your ability to repay your loan will likely slow down or stop the process entirely.

Don’t Open or Close Accounts

Opening and closing accounts are something you should avoid at all costs during the lending application process.  This goes for bank accounts as well as credit accounts.  Altering any accounts (even for the better) will likely throw up flags on your credit report and credit history thereby hurting your case with a lender.

It’s better to keep things as they are even if you feel that closing an account would be beneficial.  After all, your lender will likely use those accounts to make a case for you even if they’re potential blemishes on your personal financial pride.

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