Don’t Make a Major Purchase of Any Kind
It seems obvious, but your ability to qualify for a mortgage loan can be greatly affected if you make a major purchase prior to looking for a house or during the home purchase process. Even days before closing, buying a car, appliances or furniture for the new home can derail the process and hamper you ability to purchase the house. By altering your credit to debt ratio, a lender could pull the plug on the loan and you could end up not being able to buy the house. So just to be safe, you should wait on making a major purchase until after you buy your house.
Don’t Move Money Around
When a lender reviews your loan package for approval, one of the things they are concerned about is the source of funds for your down payment and closing costs. Most likely, you will be asked to provide statements for the last two or three months on any of your liquid assents. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stock statements, mutual funds, and even your company 401K and retirement accounts.
If you have been moving money between accounts during that time, there may be large deposits and a paper trail of all the withdrawals on some of them. The mortgage underwriter (the person who actually approves your loan) will probably require a complete paper trail of all the withdrawals and deposits. You may be required to produce cancelled checks, deposit receipts, and other seemingly inconsequential data, which could get quite tedious. Perhaps you become exasperated at your lender, but they are only doing their job correctly. To ensure quality control and eliminate potential fraud, it is a requirement on most loans to completely document the source of all funds. Moving your money around, even if you are consolidating your funds to make it “easier,” could make it more difficult for the lender to properly document.
So leave your money where it is until you talk to a loan officer.
Oh… don’t change banks, either.
Don’t Make a Career Change
For most people, changing employers will not affect your ability to qualify for a mortgage loan, especially if you are going to be earning more money in the same field. However, the effects of changing careers can be disastrous to your loan application. Lenders want to see a solid work history and job jumping does not give the sense of stability that lenders are looking for. Generally, a lender wants to see 2 years of constant employment in the same field, so even if changing careers may get you more money, it may affect your ability to qualify. Talk to your lender before you make any career decisions while you are looking for and purchasing a house.