5 Actions to Avoid During Your Mortgage Process

Be careful not to do the following things that could put your search for financing in jeopardy:

1. Applying for New Credit

Lenders will check your credit once during the qualification phase and again before finally approving your loan. If you apply for new credit in the meantime, they’ll have to take extra time to verify the new accounts. A new line of credit can also affect your credit score, possibly impacting your interest rate.

2. Paying Off Debts

Although it would normally be a good idea to get out of debt as soon as you can afford to, closing accounts or burning through cash reserves during your financing process could raise lenders’ eyebrows. Consult with your loan officer before making any major debt payments.

3. Making Big Purchases

Avoid buying anything big, like cars or appliances, during your home search. If you pay with credit, lenders will need to factor monthly payments into your debt-to-income ratio. If you pay with cash, you’ll have less to put toward a down payment.

4. Cosigning Loans

You’ve got enough to keep track of with your own finances right now without worrying about someone else’s too. When you cosign a loan for a friend or family member, you’re still taking on debt yourself, and lenders will need to investigate. Your mortgage process could also be in trouble if that person fails to make payments.

5. Changing Jobs

Starting a new job could be a good career move in the long run, but it will slow down your home search right now. Lenders will need time to verify your new employment, and you may need to provide multiple pay stubs to illustrate the changes in your financial situation. Think carefully about whether a potential new job is worth delaying your mortgage process.

If you aren’t sure whether or not a certain action will affect your financing journey, ask your loan officer. They’ll be able to tell you if something is risky and recommend the best way forward. The simplest advice, however, is to stay focused on your mortgage—other financial decisions will be easier when you’re already comfortable in your new home.