Things to Avoid After Applying for a Mortgage Loan

So, you're offer on your dream home has been accepted and you've applied for a mortgage loan.  Before you get too excited and go shopping for new furniture and electronics, keep these things in mind.  Otherwise, you could jeopardize not only your loan, but your chance at living happily ever after in that dream home!  Here is a list of "don't do" items:

- Don't make any large purchases.  That new car may be calling your name, or that comfy sectional sofa and matching chair, but adding debt to your financial situation at this time will raise a red flag and could increase your debt-to-income ratio enough to disqualify you for a loan.

- Don't open any new credit cards or apply for other types of credit!  It doesn't matter if you will get triple points and can transfer your balance for free, you will impact your credit score by adding "potential debt" or "available credit" to your financial situation.

- Don't deposit large sums of cash, another red flag to the mortgage company.  Lenders need to be able to "source" your money, so if you have cash to deposit, be sure to provide the proper paper trail to account for its origin.

- Don't switch banks.  Don't be enticed by higher savings interest rates or free checking.  At least not now.  Again, lenders need to source and track your assets, and it's easier to do if there is consistency among your accounts.

- Don't co-sign any loans for anyone!  You might want to help your favorite aunt or your youngest child, but that adds a financial obligation to your credit situation.  

- Don't change jobs!  Employment and income are huge components of your credit worthiness and your lender will re-check your employment status shortly before your closing. If you get a promotion and raise within your current company, of course, that's a great thing.  If you want to look for a new job, wait until after you move into your new home.  If there is a reason why you can't wait to change jobs, immediately speak with your lender to be sure things can be worked out.

- Don't close any accounts.  That sounds counterintuitive, but very important to your credit score are the length and depth of credit history, and your total use of credit as a precentage of available credit.  So even if you pay all credit cards off monthly, or use only 1 or 2 cards out of your collection of cards, closing an account actually has a negative impact on your credit score.

In the end, be sure to keep in contact with your lender throughout the mortgage application and approval process to ensure things go smoothly.