9 Mistakes to Avoid After You Have Been Preapproved For a Home Loan.

Updated: Feb 24



1. Avoid Applying for Credit.

Pre-approval for a home loan is based on the information that you have provided to the lender. If you are pre-approved for a home loan, your lender will expect your information to remain the same up until it is time to close on the home.

Before you close on the home your lender will to send your information to an underwriter. The Underwriter does an even deeper check to confirm the information you have provided and to verify if things are the same or has changed. They are looking to see if you have opened any new accounts, if you have the money to cover closing cost, and to make sure everything is factual and correct and most importantly that things have not changed.

If they find things that does not match with the information you have supplied, it may possibly cause the lender to cancel the loan, causing you to lose out on buying the home. Not only do you lose out on the loan but you also will lose out on any monies you have already paid out such as due diligence fee, home inspection, appraisal and any other fees that you may have paid.


2. Avoid Buying a Vehicle.

This falls into the same reasoning as applying for credit. The underwriter will check to see if you have opened ANY new accounts. This is not the time to purchase a new or used vehicle. The home buying process normally takes around 30 days. You do not want to risk losing your loan during this time. You may have to ask a family member or friend to help get you to wherever you have to go just until you close on your home.


3. Do Not Cosign for Anyone.

Once you co-sign that becomes new debt for you, even though you are not the primary person responsible for the account. If that person does not pay that bill than you become responsible for it and it will count against you if you do this after you have been preapproved.


4. Do Not Deposit Large Lump Sum of Money Into Your Bank account, Checking or Savings.



The lender will check your credit and bank statements again, even after the first time, and if for some reason they don’t, the underwriter most definitely will check it. When you deposit a large lump sum of money into your account it draws suspicion of the lender. They are going to require you to show where you got this money from and the person who gave you the money will need to give their bank statement showing that they did withdraw the money from their account to give to you. If they can not provide proof that they legitimately withdrew these funds the lender may cancel the loan. Ask your lender is it ok to receive a monetary gift before you deposit a lump sum of money into any of your accounts.


5. Don’t Switch Bank Accounts.

When working with lenders they like to see stability. Any change draws suspicion and they will require you to explain why you made the change.


6. Don’t Close Any Credit Accounts.

Why? Because sometimes closing out you credit accounts can actually lower your fico score. It is best to ask the lender about this before closing it. They may tell you a figure that you should pay it down to instead of just closing it out.


7. Don’t Change Jobs.

Why? Most lenders are going to want to see proof of 30-90 days of full time employment, they want to see stability and no changes. If you start a new job before getting preapproved they may require a letter from your job stating that you are full time, the number of hours that you are going to work and how much you are going to make an hour. Changing jobs after preapproval may actually mess up your chances of getting the loan.


8. Avoid Missing Payments.

If you start missing payments, the lender may start to think that if you can’t pay the bills that you now have than how are you going to pay the loan that they are about to give you. When they pull your credit report, after they have pulled it that first time, and they now see that you are missing payments this may be reason enough for them to refuse you the loan.


Lastly,


9. Avoid Overdraft and NSF.

Not only are they going to be looking to see if your credit score has changed, or if you have opened up any new credit, purchased a vehicle, change jobs, and making on time payments, they can also randomly ask for your bank statements. And if you have overdrafts or NSF, it is telling them you can’t afford your bills. Think about it, would you want to loan someone $250.000 when you see that they can't even make the payment for a $2000.00 loan?


Bottom Line

So By understanding and avoiding these 9 crucial mistakes, You should have no problem when it is time to close on your new home. You are now in a better position to get your home loan taken from the pre-approved state to the officially approved state, and this is exactly what you want to happen.


So, I hope this information will help you to make smart decisions so that nothing will stand in your way when it comes time for you to buy your home.



Foundation Credit Solutions do more than just fix your credit, we also help you take all of the necessary steps to get you pre-approved for a home loan. To find out more about how we can help you purchase your dream home book an appointment today.




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