5 Reasons Your Mortgage Can Fall Through
Your mortgage isn’t a ‘sure thing’ until you sign the closing papers. Until that point, anything can happen, which is why it’s so important to keep your financial and employment situation status quo. If you’re thinking about buying a home or are in the middle of the process, here are five things that could make you lose your loan approval.
- Changing Jobs When lenders approve you for a mortgage, they do so based on your employment and income. They assume your employment will remain the same, even though we all know that’s not always the case. While changing jobs after you close on your loan isn’t a big deal, changing jobs mid-loan process could cause a delay in processing or even cause you to lose your loan approval.
- Hurting your Credit Score Lenders pull your credit when you apply for a mortgage and again before you close. If your score changes drastically during that time (for the worse), you could lose your loan approval. Once pre-approved, try keeping your credit the same by not opening new accounts, missing payments, or racking up too much credit card debt.
- Making Large Purchases After you apply for (and are approved) for a loan, hold off on any large purchases until after you close your loan. Making large purchases, especially on credit, can cause you to lose your loan approval. Here’s why. If you bought on credit, you either opened a new credit account or increased the debt on an existing account. This can hurt your credit score and increase your debt-to-income ratio, which can hurt your chances of approval.
- Making Large Deposits or Withdrawals in your Bank Account Large deposits or withdrawals in your bank account are red flags to lenders. A large withdrawal means you spent money and might have more debt or less money to put down on the home than you were approved for. Large deposits could signify that you borrowed money from someone or took out a loan. A new loan (even if from friends or family) is a debt that affects your debt-to-income ratio. Therefore, if you increase your DTI, you could lose your loan approval.
- Not Providing Requested Documentation Even if you’re pre-approved for a mortgage, underwriters always need more information. If they ask for documentation you can’t or don’t provide, they won’t be able to clear your loan conditions. This could cause them to decline your loan.
Final Thoughts Mortgage approval isn’t official until you close on your loan. In the meantime, it’s crucial to keep your information as stable as possible. If you can help it, make sure your credit score doesn’t change, your bank account stays the same, and you don’t change jobs or income. With everything status quo, you have a beter chance of qualifying for and closing your loan. If you have questions about what might affect your loan or are ready to look at homes, contact me today.