10 Things YOur Loan Officer Wants You to Avoid During Your Approval Process

Ten Things Your Loan Officer Wants You to Avoid During Your Approval Process

Buying a home is one of the most exciting and significant financial decisions you’ll make. However, navigating the mortgage process requires careful planning and financial discipline. 

To ensure a smooth loan approval, click read more to see ten things your loan officer wants you to avoid during the homebuying process.

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1. Changing Jobs

Lenders prefer stability, and switching jobs during the mortgage process can complicate things. Even if you’re moving to a higher-paying position, a job change could delay or even derail your loan approval. You also need to disclose if you get a raise at some point throughout the loan process, as that can make an impact on your approval (usually for the best, but definitely discuss it with your loan officer). Decisions like quitting your job, going back to school, or switching from full-time to freelance work can all affect your loan approval. Try to maintain financial stability until after your mortgage closes.

2. Making Large Purchases

Buying a new car or expensive furniture on credit increases your debt-to-income ratio, which could make you less eligible for a mortgage. Even using up your cash on hand can disrupt the balance of your bank accounts and negatively impact your loan process. Wait until after you close on your home before making major purchases.

3. Opening or Closing Credit Accounts

Your credit score is crucial to securing a loan. Opening new accounts can lead to hard inquiries that lower your score, while closing accounts can reduce your available credit, negatively impacting your debt utilization ratio.

4. Missing Payments

Even one late or missed payment on your current credit accounts can damage your credit score and raise red flags for your lender. Stay on top of all your bills and pay them on time.

5. Depositing Large Amounts of Cash Without Documentation

Lenders will scrutinize your bank statements. Large cash deposits without a clear paper trail can be a red flag, as they need to verify your sources of income and funds for the down payment.

6. Cosigning Loans for Others

Co-signing for someone else’s loan means you’re financially responsible if they default. This increases your debt obligations and could hurt your chances of getting your own mortgage.

7. Ignoring Lender Requests for Documentation

Your loan officer may request additional documentation during the process. Delaying or failing to provide these documents promptly can slow down your loan approval or even result in denial.

8. Changing Bank Accounts

Lenders have to verify your assets. Moving money around, closing a bank account, or opening a new bank account can complicate the process.

9. Failing to Disclose Debts or Liabilities

Failing to disclose debts can result in accusations of mortgage fraud and can have major legal ramifications. I once had a deal fall through because the buyer (not my client) failed to disclose a mortgage lien on another property he owned.

10. Overestimating Your Budget

Getting pre-approved for a certain loan amount doesn’t mean you should spend the maximum. Consider all your expenses, including property taxes, insurance, and maintenance costs, to ensure a comfortable homeownership experience.

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Your loan officer’s goal is to help you secure financing with as few obstacles as possible. By avoiding these common pitfalls, you’ll improve your chances of a smooth and successful homebuying process. If you’re ever unsure about a financial move, check with your loan officer first to keep your home purchase on track.