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5 Mistakes to Avoid During Mortgage Approval

If you’ve never applied for a mortgage before, you might find the process overwhelming. Because your loan provider is considering loaning you a tremendous amount of money, they will look into all aspects of your financial life to determine if they believe you are responsible enough to make your monthly payments. It can feel a little invasive, but if you dream of owning your own home, it will be worth it. Unfortunately, there are innocent mistakes you can make during the mortgage approval process that could delay your goal of becoming a homeowner. Here are several things to avoid when applying for a mortgage:

Making Late Payments

Paying all your bills on time every month is always important. But it’s even more vital when you’re going through the mortgage approval process. Even one late payment can cause a dip in your credit score, which could be enough to have your request for a loan denied. Not only that, many lenders require a record of at least 12-months of consecutive on-time payments on all accounts before  considering a mortgage loan application. So, you’ll need to make sure you’re staying current on all your bills even before you submit an application.      

Opening or Closing Credit Cards 

The mortgage approval process puts your finances under a microscope like never before. Opening a new credit card during this time can be a risky move, especially if you run up a lot of new charges quickly. Conversely, closing unused credit card accounts isn’t the right move, either. Doing so can change your debt-to-income ratio, which may be a make-or-break factor in your loan approval. During this time, it’s best to limit your use of credit cards and continue to make payments on any outstanding balances.

Changing Jobs

Your loan officer wants to know you’re a stable, responsible person. And while the act of changing jobs doesn’t make you unstable, it’s not something they want to see when you’re in the loan approval process. Remember, they’re deciding if they believe you will be able to make monthly payments, and having a consistent income is a big part of that. For now, put that career change or those dreams of owning your own small business on hold until you’re approved and settled into your new home.

Unusual Account Activity

Anything out of the ordinary going on in your accounts will sound an alarm with your loan officer. Avoid making large cash deposits or withdrawals and make sure you don’t incur any overdraft charges. It’s a good idea to set up overdraft protection on your account before you begin the mortgage application process, so you’ll be covered just in case.

Cosigning a Loan

It can be hard to say no when a friend or family member asks you to co-sign a loan, but it’s the right thing to do when you’re trying to get approved for a mortgage. Remember, any unusual financial activity can slow or stop the approval process. And by cosigning a loan, you are responsible for paying it back if the other party defaults. Learn more about the pros and cons of cosigning a loan here.

If you’re not sure if your finances are stable enough to apply for a mortgage, our free online financial assessment can help you get a clearer picture of where you stand financially.


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