Getting approved for a mortgage can be an exciting process, but it also requires careful attention to your financial picture. During the 30–60 days it can take to get from application to funding, even seemingly small financial changes can affect your loan.
Here are some of the most common areas to be careful with while your mortgage is being processed.
Employment
Your employment and income are an important part of your mortgage qualification, so major changes should be discussed with your mortgage professional before you make them.
Changing jobs, changing careers, switching from salary to commission or vice versa, moving to part-time work, taking unpaid leave, or taking an extended amount of time off can all affect how your income is evaluated.
If you are a business owner or self-employed, your situation may require additional documentation. Keeping your tax filings current and discussing significant changes to your business structure before making them can help avoid unnecessary complications.
Have no fear: if your tax records are not current, or you cannot qualify because of heavy write-offs, we have loan solutions that do not require tax forms.
Money and Bank Accounts
Your financial accounts will be reviewed during the mortgage process, so it is important to keep your finances consistent and well documented.
Moving money between accounts without documenting the transfer, accepting gift money without discussing it with your mortgage professional first, borrowing money, depositing cash, or allowing someone else to borrow your down payment funds can all create questions during underwriting.
It is also important to avoid paying off debts with borrowed money unless you have discussed the transaction beforehand.
Credit
The mortgage process is not the time to make unnecessary changes to your credit profile.
Opening new credit accounts, closing existing credit cards, or taking on additional debt can change your credit profile, including your credit score, and potentially affect your qualification. These changes could also negatively impact the interest rate you get.
Thinking of co-signing for someone? Don’t do it. Already co-signed? Extra documentation will be needed.
It is also important to think carefully before using retirement funds or other borrowed funds to pay off debts or make large purchases. Discussing these decisions before making them can help prevent surprises later in the process.
If You Already Own Property
If you already own real estate, your lender may need additional documentation to verify your existing obligations and income.
This can include mortgage statements, insurance policies, HOA information, and rental agreements if you own an investment property or have rental income.
Having these documents available can help make the process more efficient and give the lender a clearer picture of your overall financial situation.
Printable Version
For a quick reference, you can also download and print Athena’s Mortgage Landmines checklist.
The Bottom Line
The mortgage process involves a detailed review of your employment, income, assets, debts, credit, and existing real estate. What may seem like a simple financial decision can sometimes have an impact on your loan.
The best approach is to communicate with your mortgage professional before making significant changes during the application and underwriting process. A quick conversation can help you understand what documentation may be required and whether a particular financial move could affect your loan.
I’d love to help you feel confident and informed at every step.
Athena Paquette
NMLS #321683 • CA DRE #01142629
30+ years helping buyers succeed
310-218-6855
NMLS #321683 • CA DRE #01142629
30+ years helping buyers succeed
310-218-6855