This blog is for educational purposes only, not an offer of credit or advertisement for current loan terms. It does not provide legal advice. Refer to our loan web pages or consult professional advisors for specific information.
It’s hard to understate the importance of getting your mortgage pre-approved in today’s market and the overall homebuying process.
A mortgage pre-approval signifies that a lender has checked out your financial situation and determined how much you can borrow, subject to certain conditions.
Pre-approval gives you a clear budget and makes you a more attractive buyer to sellers. It indicates that you are serious and financially capable of purchasing a home.
However, some buyers make certain mistakes that can effectively negate their pre-approval, making it much harder for them to get a home.
To help you out, here’s a comprehensive guide on the dos and don'ts after receiving mortgage pre-approval to ensure you maintain your financial standing and secure your dream home.
Apply with MIDFLORIDA Credit Union today.
What not to do after getting pre-approved for a mortgage
There are limitations on what you can do after receiving a mortgage pre-approval because lenders want to ensure you're a financially stable borrower with minimal risk.
Avoid changing jobs or careers
Job stability is a significant factor when assessing your ability to repay your loan.
Lenders always consider your employment history and income stability as part of the pre-approval process. Changing jobs or careers during this period can raise red flags and jeopardize your loan approval.
Even if the new job offers a higher salary, the uncertainty and lack of a proven track record with the new employer can be considered a risk.
It’s generally best to maintain your current employment until your mortgage closes.
Avoid major purchases
Large purchases can negatively impact your debt-to-income ratio and credit score, vital to maintaining your pre-approval.
When you make significant purchases, such as a car or expensive furniture, you increase your debt load and reduce your available credit.
Do not apply for new credit
Each credit application is recorded on your credit report and can temporarily reduce your credit score.
Multiple credit applications can signal financial instability and lead to a reevaluation of your mortgage pre-approval—refrain from applying for new loans, credit cards, or any other forms of credit during the pre-approval period.
Closing credit accounts can be equally damaging
Alternatively, closing credit accounts can also negatively impact your credit history and score.
Your credit score is determined, in part, by:
- The length of your credit history
- The amount of available credit
Closing accounts reduces the credit you have access to, thereby increasing your credit utilization ratio—ultimately lowering your credit score.
Furthermore, older accounts contribute positively to your credit history, so keep your existing credit lines open and active until your mortgage process is complete.
What to do after getting a mortgage pre-approval
There are also proactive things you can do to maintain your mortgage pre-approval.
Continue paying bills on time
Lenders will continue to monitor your credit activity until your loan closes. Late payments can negatively affect your credit score and jeopardize your pre-approval status.
Consider setting up reminders or automatic payments for all your bills—it can help you avoid missed payments and maintain a positive credit history, which is essential for final mortgage approval.
Keep savings intact
It’s essential to keep your savings intact after obtaining mortgage pre-approval.
- Avoid withdrawing large sums from your savings accounts, as these funds will be necessary for closing costs, down payments, and moving expenses
- Having a healthy savings balance demonstrates financial stability and reassures lenders that you are prepared for the additional costs associated with purchasing a home
- Maintaining your savings also provides a financial cushion in case of unexpected expenses during the home-buying process.
Communicate with your lender
Finally, staying in touch with your lender throughout the pre-approval and home buying process is advisable.
Promptly disclose any financial changes, such as income change or significant expenses. Keeping your lender informed allows them to provide guidance and adjust your pre-approval if necessary.
Regular communication ensures you’re on track and helps prevent surprises that could disrupt your mortgage approval.
Common mistakes to avoid during the pre-approval period
If you’ve discerned what to do and not do with your finances after mortgage pre-approval, let’s discuss other common occurrences you should try to avoid.
Windfalls are great—if handled correctly
It’s important to emphasize that any significant changes in your financial status, even positive ones, can impact your mortgage pre-approval.
Examples include:
- Receiving a large gift
- Inheritance
- Gambling winnings
While receiving a large sum might seem beneficial, it can raise red flags if not properly documented or explained.
It’s important to consult with your lender about big financial changes to understand their potential impact on your pre-approval status.
Neglecting to lock in interest rates
Locking in a favorable interest rate can provide financial stability and predictability.
Interest rates fluctuate. You must lock in a rate to avoid the risk of higher rates when you close on your home.
An option is to discuss rate lock options with your lender to secure a rate that aligns with your budget and financial goals.
Skipping home inspections
Home inspections are critical in identifying potential issues with the property you intend to buy. Skipping this step can lead to unexpected and costly repairs later.
A thorough inspection can reveal defects that may not be apparent during a regular viewing, such as:
- Structural problems
- Electrical issues
- Plumbing defects
- Insect infestations
- Mold or dampness issues
Investing in a professional home inspection ensures you are making an informed decision and helps you avoid unforeseen expenses that could strain your budget after purchase.
Maintaining your mortgage pre-approval: Conclusion
Maintaining your mortgage pre-approval requires careful financial management, but it can be done.
- Continue paying bills on time
- Keep your job stable
- Maintain your savings
- Avoid making major purchases, applying for new credit, or changing jobs
- Stay in communication with your lender
Finally, avoid common mistakes like neglecting to lock in interest rates or skipping home inspections. Following these guidelines can help homebuyers like you ensure a smooth homebuying process and secure your path to homeownership.
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Start your application with MIDFLORIDA to begin your pre-approval process today.
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