6 Things To Avoid After Applying For A Home Loan

Dated: June 28 2022

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6 Things To Avoid After Applying for a Home Loan

6 Things To Avoid After Applying For A Home Loan


If you're a 1st-time home buyer or a just a buyer who's moving for the first time in many years, then chances are you already know that applying for a mortgage loan is one of the first steps you need to take before shopping for a new home. In the Tampa Bay area, having a loan pre-approval letter from your lender is a MUST-HAVE item before shopping for a home. Many homeowners will only review offers that are accompanied by a lender letter and proof of funds to close. It's important to have these items ready to go before you shop for a home. Without them, you may miss a chance to snap up the home of your dreams (remember, housing inventory is still low and moving quickly in our area).


Once you’ve applied for a mortgage to buy a home, there are some key things to keep in mind while house-hunting and once you're under contract. It’s exciting to start thinking about moving in and decorating, but be careful when it comes to making any big purchases. Here are a few other things you may not realize you need to avoid after applying for your home loan.

Don’t Deposit Large Sums of Cash

Lenders need to source your money, and cash isn’t easily traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your lender so you don't hit any speedbumps during the underwriting or qualification process. 

Don’t Make Any Large Purchases

It’s not just home-related purchases that could disqualify you from your loan. Any large purchases can be red flags for lenders. People with new debt often have higher debt-to-income ratios (how much debt you have compared to your monthly income). Since higher ratios make for riskier loans, borrowers may no longer qualify for their mortgage once a credit card balance starts to increase. Resist the temptation to make any large purchases, even for furniture or appliances.

Don’t Co-Sign Loans for Anyone

When you co-sign for a loan, you’re making yourself accountable for that loan’s success and repayment. With that obligation comes higher debt-to-income ratios as well. Even if you promise you won’t be the one making the payments, your lender will have to count the payments against you and the balance of the loan WILL show up on your credit report. 

Don’t Switch Bank Accounts

As mentioned above, lenders need to source and track your assets throughout the loan approval process. That task is much easier when there’s consistency among your accounts. Before you transfer any money, speak with your loan officer. Some lenders monitor your accounts right up until the day of closing. 

Don’t Apply for New Credit

It doesn’t matter whether it’s a new credit card or a new car. When you have your credit report pulled by other financial institutions to qualify you for a new loan or new credit accounts in multiple financial channels (mortgage, credit card, auto, etc.), it will have an impact on your FICO® score. Lower credit scores can determine your mortgage interest rate and possibly even your eligibility for approval.

Don’t Close Any Accounts

Many buyers believe having less available credit makes them less risky borrowers and more likely to be approved for a loan. This isn’t true. A major component of your credit score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both of those aspects of your score.

In Short, Consult an Expert

To sum it up, be upfront about any changes in your debt or credit accounts when talking with your lender. Blips in income, assets, or credit should be reviewed and executed in a way that ensures your home loan can still be approved. If your job or employment status has changed recently, share that with your lender as well. Ultimately, it’s best to fully disclose and discuss your intentions with your loan officer before you do anything financial in nature.

Bottom Line

You want your home purchase to go as smoothly as possible. Remember, before you make any large purchases, move your money around, or make any major life changes, be sure to consult your lender – someone who’s qualified to explain how your financial decisions may impact your home loan.


The Sandy Hartmann Real Estate Group


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Mike Hall

Born and raised in the Midwest, Mike Hall has a passion for helping buyers find the perfect homes in the Tampa Bay area. When Mike isn't working, you can often find him walking his 3 dogs around town,....

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