Mortgage Pre-Approval
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What Not to Do Once You Have Mortgage Pre-Approval

03.02.2020 | Buying

Obtaining mortgage pre-approval is a major milestone in the home-buying process—but reaching it doesn’t mean you’re home free. Between the moment you’re pre-approved and the day you close on your property, changes to your financial situation can impact your approval status. Fortunately, knowing which moves you should avoid making during this crucial period can help ensure a smooth, obstacle-free home purchase.

If you’ve been pre-approved for a mortgage, here’s what not to do…

Change jobs

Leaving one position to start another can be a positive life development, but lenders don’t always see it that way. That’s because your mortgage pre-approval is based in part on your income and employment history. Any significant changes you make can cause a lender to reassess your qualifications (though some transitions—like moving to a less stable, commission-based job—are more likely to matter than others).

Make a major purchase

If you’re eager to buy a new car or living room set, you may want to hold off while your loan application is being processed. Large purchases can raise your debt-to-income ratio, which is one of the major factors lenders look at when they decide whether to grant you pre-approval. Unless you qualify by a large margin, even a slight shift can have an effect on your loan status.

Apply for a credit card

Any move that negatively impacts your credit can be detrimental to your mortgage approval, which is why you should avoid applying for any new cards. Put simply, applications result in hard credit inquiries—which can in turn lower your score. Play it safe by waiting until after your closing paperwork is complete before trying to secure a new card.

Forget to make payments

If you pay down your loans and credit card debts like clockwork, it’s a sign to lenders that you’re dependable. In contrast, forgetting to make even one payment can signal that you’re at risk of defaulting on your mortgage. To keep your credit score intact and avoid raising any red flags before closing, don’t overlook your monthly obligations.

Cosign a loan

You may want to help out a friend or family member by being a cosigner for their loan, but it’s best not to do so before you’ve finalized your home purchase. If you do decide to cosign, it will appear on your credit report—plus, you’ll be held liable if the borrower defaults.

Pay off your debt completely

Paying off your debt as soon as you’re able to may seem like a no brainer, but it can have unintended consequences if you’re in the process of buying a home. That’s because closing an account or making a large payment that decreases your cash reserves can impact your credit. Even if these changes don’t create any issues, you should be prepared to explain the source of the money you’ve used.

It’s easy to throw yourself into the home hunt once your mortgage is pre-approved, but it’s important that you also stay vigilant about your finances. That means continuing to make regular debt and loan payments, and talking to your lender before making any changes that could impact your finances. Following these simple steps will help you pave the way for a smooth and successful home purchase!

Preparing to buy a home? For over 36 years, our clients have trusted us to minimize risk, offer unbiased opinions, and ensure their best interests are served. Contact us today to talk about your needs, by emailing us at or calling us at 416-441-2888 ext. 772.

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