Getting pre-approved is only the first step in buying a home, the following information is a list of do’s and don’ts once you get pre-approved. These tips are likely to help you get better financing terms and also prevent yourself from sabotaging your dreams of homeownership.

WHAT NOT TO DO:

1: DO NOT TAKE NEW CREDIT

  • The bank will execute your credit again just before closing.
  • New credit inquiries will lower your credit score and will also need to be explained. If new credit is extended, the new payment must be verified and your debt-to-income ratio must be readjusted for the increased debt.

2: DO NOT INCREASE YOUR DEBTS

  • Large purchases can hurt your chances of closing.
  • Using cash will deplete your cash reserves, which may be a factor in your approval. Making a large purchase on credit will increase your debt and may result in your debt-to-income ratio becoming inadequate when recalculated.

3: DON’T RUIN YOUR CREDIT

A pre-approval is based on your credit; income and assets at the time of issuance.

  • Don’t close your accounts
  • Don’t miss payments
  • Do not incur credit inquiries
  • Do not increase your credit balances

4: DO NOT MAKE LARGE DEPOSITS

All assets must be documented, so cash cannot be used to close. If you can’t track the paper money, then as far as the bank is concerned, the money doesn’t exist.

5: DO NOT SIGN JOINTLY FOR LOANS

  • If you co-sign someone, the debt will reflect on your credit and the new debt will negatively affect your debt-to-income ratio.
  • If you can provide canceled checks for a minimum of 12 months that reflect payments coming directly from the co-signer’s account, the payment may be omitted.

6: DO NOT QUIT OR CHANGE JOBS

Your work will be reverified with your employer just prior to closing. Obviously if you are not working your income will be annulled. If you are starting a new job, you will need to provide pay stubs to prove income.

7: IGNORE LENDER REQUESTS

When your Loan Officer requests a document, follow their instructions. Please provide all documents with all pages, even if they are blank, as soon as possible to avoid delays.

TO DO:

  1. Fax or email all requested documents immediately and include all pages, even if they are blank
  2. Keep all new pay stubs and bank statements in a folder in case you need them so they are easily accessible
  3. Continue to pay all your debts and loans on time