8 Things NOT to do While Your Mortgage Approval is in Process

With mortgage rates hovering near all-time lows, many Inland Empire/SoCal residents are taking advantage of refinance and home buying opportunities.   If this is you, I have compiled a list of eight things NOT to to do while your mortgage approval is in process.

The downside of today’s unexpectedly-low rates and, numerous regulatory changes, and need for more complaint loans is that mortgage lenders are ill-equipped for the rush of new business. 

As a result, the process of underwriting and approving new mortgage applications is taking many of the large retail banks as long as 2 months to complete.  

Because there may be 60 days between the application date and the closing date, it’s important for applicants to remember that mortgage approvals can be revoked at any time prior to funding. 

As mortgage applicants, there are many events that are out of our control — job security and health matters, for example.  But there are also events that are within our control. 

Knowing that mortgage approvals can be fragile, here are 8 things you should absolutely not do while your home loan is in process.  It may be the difference between being approved by the bank, and being turned down.

1. Don’t buy a new car or trade-up to a bigger lease.
2. Don’t quit your job to change industries
3. Don’t switch from a salaried job to a heavily-commissioned job
4. Don’t transfer large sums of money between bank accounts
5. Don’t forget to pay your bills — even the ones in dispute
6. Don’t charge ANYTHING or open new credit cards — even if you’re getting 20% off!!!
7. Don’t accept a cash gift without filing the proper “gift” paperwork
8. Don’t make random, undocumented deposits into your bank account

Now, avoiding these items may not be practical for everyone.  For example, if your car lease is expiring and you need a larger vehicle, it doesn’t mean you can’t buy the car — just check with your loan officer first to be sure the new payments won’t “break” your approval . 

The same goes for accepting cash gifts from parents.  There’s a right way and a wrong way to accept gifts and doing it the wrong way may prevent you from using the gift as a source of downpayment.

Mortgage lending is full of “gotchas” and with underwriting times stretching to 45-60 days, it’s a lot more likely that a mortgage applicant will trip into one.  Working with an experienced Loan Officer and following these 8 rules,  is a good start.


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