Mortgage Do’s and Don’ts:
What to Do (and What to Avoid) Before You Apply and Before You Close

Applying for a home loan is an exciting step – but it’s also a process where small financial changes can have a big impact. One of the most common causes of loan delays (or even denials) is borrowers unintentionally making changes that affect credit, income, or assets while their loan is being reviewed.

To help you navigate the process smoothly, here’s a list of Do’s and Don’ts, broken into two key phases:

1. Before you apply for a home loan
2. After you’ve applied and before closing

Before You Apply for a Home Loan

✅ DO:

• Get prequalified or preapproved early
  This gives you a clear picture of your buying power and helps you shop with confidence.
• Check your credit report
  Review for errors, unexpected accounts, or inaccuracies that could impact your score.
• Pay all bills on time, every time
  Payment history is one of the most important factors in your credit profile.
• Continue paying your rent, utilities, and other monthly obligations
  Lenders look for consistency and reliability.
• Keep your spending patterns consistent
  Normal, predictable credit use is a good thing. Sudden changes can raise red flags.
• Ask questions
  A well-informed borrower is a strong borrower. Don’t hesitate to ask your loan officer how decisions today could affect your loan tomorrow.
• Get excited about your new home!
  Buying a home is a big milestone – enjoy the process.

🚫 DON’T:

• Change jobs or become self-employed
  Income stability is critical. Even positive career changes can delay or complicate approval.
• Make large purchases (cars, furniture, jewelry, appliances)
  These can increase your debt-to-income ratio and affect loan approval.
• Open or close bank accounts
  This can create additional documentation requirements and slow down the process.
• Move money between accounts unnecessarily
  All transferred funds must be sourced and documented.
• Apply for new credit or request credit limit increases
  Even a credit inquiry can impact your score.
• Deposit cash
  Cash deposits must be fully sourced and explained, and are often not usable.
• Withdraw funds from a 401(k), trust, or investment account without guidance
  Always confirm with your loan officer first to ensure the funds are eligible and properly documented.

 

Contact us today!

 

Once You’ve Applied for a Home Loan (Before Closing)

Once your loan is in process, it’s especially important to keep your financial picture as unchanged as possible.

✅ DO:

• Keep copies of all bank statements and paystubs (all pages)
  You may be asked for updated documents during underwriting.
• Document large deposits
  Any single deposit over $500 may need to be sourced, keep copies of checks and deposit records.
• Notify your loan officer if you plan to travel
  This helps avoid delays if documents need signatures or updates.
• Communicate before making any financial changes
  Even changes that seem minor should be reviewed first.
• Disclose gift funds early
  Gift funds are allowed, but they must follow specific documentation rules.
• Remain employed at your current job
  Yes—this still needs to be said!
• File all personal and business federal tax returns provided for qualification
  Missing filings can stop a loan in its tracks.
• Liquidate approved retirement or investment funds early
  This ensures funds are seasoned and available when needed.
• Move HELOC funds into your checking account promptly
  If used for down payment or closing, this is typically required prior to closing (confirm with your loan officer).
• Confirm wire procedures with your bank early
  Especially important if your bank is out of state—know timelines and in-branch requirements.
• Review your loan application carefully
  Pay special attention to:
  • Liabilities listed incorrectly
  • Any properties you own that may be missing (all real estate must be disclosed, even if owned free and clear)
• Disclose unpermitted or unfinished projects (for refinances)
  Surprises here can cause delays late in the process.

🚫 DON’T:

• Make major purchases (cars, furniture, appliances, etc.)
• Apply for or open new credit accounts
  Even “preapproved” offers can hurt your loan.
• Transfer or consolidate credit card balances
• Pay off collections or charge-offs without approval
  This can sometimes lower your score—always ask first.
• Close credit card accounts
  This may negatively impact your credit utilization ratio.
• Increase existing debts or take out new loans
• Change or open new bank accounts
• Co-sign on any loans
• Open new accounts of any kind (including cell phones)
• Pay off loans or credit cards unless instructed
• Start home improvement projects
• Schedule your move or give notice until you have a clear-to-close
• Deposit large sums of cash without speaking to your loan officer first

Final Thoughts

The best advice during the mortgage process is simple: When in doubt – ask first. Your loan officer’s job is to guide you through the process, prevent delays, and help you close on time.

If you’re thinking about buying or refinancing and want personalized guidance, we’re here to help every step of the way.

 📞 Contact us today to speak with a Pacific Home Loans loan officer!