Things to Avoid After Applying for a Mortgage

Applying for a mortgage is a major step towards homeownership, especially in Sacramento’s competitive real estate market. But once you’ve submitted your application, the journey isn’t over. Several financial missteps could jeopardize your approval. Let's break down what you should avoid to keep the process running smoothly!

1. Don’t Make Large Purchases
Are you tempted to buy that new couch for your future home? Hold off. Lenders track your credit score and financial activity up until closing. Major purchases can increase your debt-to-income ratio and hurt your mortgage approval. It’s best to avoid buying big-ticket items like cars or furniture until after you close on your home.

2. Don’t Open or Close Credit Accounts

Opening new credit accounts or closing existing ones can lead to fluctuations in your credit score, which lenders closely monitor. Opening new lines of credit might suggest you’re relying on borrowed money while closing accounts can reduce your available credit, both of which are red flags.

3. Avoid Changing Jobs

Job stability is key when applying for a mortgage. Lenders want consistent income and employment history, so switching jobs during the process could raise concerns about your ability to repay the loan. If possible, stay put until your loan is finalized.

4. Don’t Make Late Payments

Keep paying your bills on time. Even one late payment can hurt your credit score, which could lead to a higher interest rate or, worse, rejection of your mortgage application. Set up automatic payments to avoid any slip-ups.

5. Don’t Transfer Large Sums of Money

Transferring large amounts of money between accounts without documentation can raise questions during underwriting. Lenders will need to verify where the funds came from, so if you’re moving money around, be prepared to explain each transaction.

6. Avoid Cosigning Loans

When you cosign a loan, you’re responsible for the debt. This liability could affect your debt-to-income ratio and may lead lenders to view you as a higher risk. Wait until after closing on your home before agreeing to cosign any loans.

Navigating the mortgage process can be tricky, especially in a competitive market like Sacramento. By avoiding these financial pitfalls, you’ll stay on track to close on your dream home. Need more homebuying tips or advice? Call today (916) 320-9953 —we're here to help you every step of the way!