Best Practices While Shopping for a Home

Minimize change and keep an open line of communication.

Mortgage pre-approval is based on a review of your credit and financial profile at the time of application. With a pre-approval letter in hand, you can confidently shop for a home that is within your budget and expect the loan will be closed. Your credit, down payment source, and ability to repay will be checked again after you have a house under contract and prior to final approval. It’s critical to maintain your credit profile while you are shopping for a home, so the approval is not jeopardized.

Additional debt will affect your credit, so don’t take on any new credit lines or debt commitments during this time. Wait until after closing to finance the purchase of furniture for your new home. This is also not the time to buy a new vehicle or boat. Also, don’t co-sign a loan, for example on a relative’s vehicle. Make sure you are paying your bills on time and don’t excessively run up credit card balances. Your credit will be checked again prior to the final approval and any new debts or commitments will be discovered and can invalidate the pre-approval.

The down payment for your home purchase should be in your bank account before applying for a mortgage as use of an approved source for a down payment is critical for loan approval. Cash deposits after pre-approval raise a red flag relating to the use of approved sources for a down payment, so such deposits should be avoided. Your regular payment deposits should be the only funds moving into your bank account during this time. If you have extra cash on hand or receive cash as a gift, it generally should not be deposited prior to the final approval. Any cash deposits showing up in a bank account will need to be traced. Your existing bank accounts should be maintained through the final approval and loan closing as opening new bank accounts or closing existing accounts will be another point for review and explanation.

Proof of stable income is required for your loan approval. Job opportunities can arise at any time, but a job change after pre-approval can negate the loan approval and may require some months of stability before being able to get a loan.

We like to keep an open line of communication with our customers all through the process. We’ll provide a checklist of what do to and not do after pre-approval, so you an have peace of mind that you will have a solid and smooth transaction. Life happens, and situations may come up that are to of your control. Good communication with your loan officer keeps us informed about any financial changes that can affect approval and we can provide guidance on how to maintain the pre-approval.