Mortgage Do’s & Don’ts: What NOT to Do While Buying a Home
Buying a home is exciting, but once you’re under contract (or even pre-approved), your financial decisions matter more than ever. Many buyers don’t realize that small changes to credit, income, or assets can delay or even derail a closing.
To help keep your loan on track, here are the most important Mortgage Do’s & Don’ts every buyer should follow during the homebuying process.
Mortgage DO’s
Stay current on all existing accounts.
Your mortgage, car payments, credit cards, everything matters. Even one 30-day late payment can significantly impact your credit score and your loan approval.
Keep All Financial Documents
Save documentation for any deposits made into your accounts, including:
Earnest money
Gift funds
Transfers between accounts
Lenders must be able to source and verify funds.
Continue Using Credit as Normal
Sudden changes to your credit behavior can raise red flags. Avoid maxing out cards or stopping usage entirely unless advised by your loan officer.
Keep Your Original Documents Updated
If your pay stubs or bank statements are more than 30 days old, you’ll need to provide updated copies before closing.
Provide Documentation for the Sale of Your Current Home
If you’re selling a home, be prepared to provide:
Sales contract
Closing disclosure (HUD-1 / settlement statement)
Documentation showing where your proceeds were deposited
Mortgage DON’Ts
Don’t Apply for New Credit
This includes:
Credit cards
Furniture or appliance financing
Auto loans
“Buy Now, Pay Later” options
New credit inquiries and balances can negatively affect your score and debt-to-income ratio.
Don’t Pay Off Collections or Charge-Offs Without Guidance
Paying off old collections can sometimes cause your credit score to drop. Always consult your loan officer first.
Don’t Close Credit Card Accounts
Closing accounts can increase your credit utilization ratio, which may lower your score, even if you’re trying to “clean things up.”
Don’t Make Major Asset Changes
Avoid:
Moving large sums of money
Closing or opening bank or investment accounts
Making significant financial transfers
Always check with your loan officer first.
Don’t Make Large Unexplained Deposits
Non-payroll deposits must be documented. Cash deposits cannot be used and may cause delays in underwriting.
The safest rule during the mortgage process is simple:
If you’re thinking about changing anything financially, ask first.
Having the right guidance can mean the difference between a smooth closing and a stressful delay.
If you have questions about what’s safe to do during your loan process, our team is always here to help.
