Common Mistakes That Can Delay Your Mortgage Approval
Avoid common mortgage mistakes that can delay your approval and cost you your dream home.
Congratulations! You have decided to purchase a home and have started the financing process. You completed your mortgage application (the 1003), you provided the basic documentation like paystubs, bank statements, W-2s, and tax returns if needed, and you have been pre-approved for your mortgage. Or maybe you have started the financing process so you can begin your search for a home. Either way, congratulations!
Now is the time to remain responsive to your lender if they request any additional documents or letters of explanation. Once you have an accepted purchase contract, your lender and realtor will work together on the appraisal, title work, and, if required by your state, an escrow attorney.
How to Keep Your Mortgage Approval on Track
At this point, we need to talk about what not to do during the mortgage process. The holiday season can make people feel pressured to spend, and it is easy to get distracted by parties, gift exchanges, and long lines at Black Friday sales. It happens every year.
Maybe you found this article at a different time and are already dreaming about how you will decorate your new home or where you will put your furniture. Perhaps you are thinking about a project or two that would make the house perfect for your shoe collection.
All of that is fair, but before you dive in headfirst, remember that lenders closely monitor your financial picture until the loan is funded and the deed is recorded.
During the mortgage process, your credit report is checked multiple times. At a minimum, it is checked at the start and again at closing. Often, it is checked more. Each time, your credit lines update, including any new debts. Balances and payments are also updated. New inquiries must be explained. Your FICO score may change if you have been shopping with credit. All of this can affect your approval.
What Not to Do During the Mortgage Process
I can honestly tell you that throughout my career, many people have lost their mortgage approval near the end because of avoidable mistakes. It happens far more often than most buyers expect. Here is what you should avoid altogether.
Do not open or apply for new credit cards.
Even if the store promises a discount, skip it. Not the store card, not the car lease, not the tempting zero percent deal. Underwriters see a fresh inquiry, and those eyebrows shoot up so fast they could sprain something.
Do not assume Buy Now Pay Later loans or cash-advance apps will go unnoticed.
Underwriters see every deposit and every payment on your bank statements. We know who Dave, Albert, and Brigit are, so pretending they are “just friends” and not lending apps is about as effective as hiding a llama in your living room. We are going to spot it.
Do not spend your down-payment funds.
You worked hard to save for this home. Do not get to closing day short on cash. You do not need a new couch right now. Or a Peloton. Or a “congrats, me” trip before the ink is dry. Keep spending low and steady.
Do not make large deposits.
No cash, no big checks, no surprise transfers. Underwriters are allergic to unexplained deposits. If your cousin suddenly Venmos you a chunk of money “for the wedding you never had,” trust me, it becomes a whole situation. Keep your accounts calm and predictable.
Do not move money between accounts like it is a shell game.
Every transfer needs a clear explanation. Underwriters do not enjoy detective work that ends with ten more bank statements and a chart to connect the dots.
Do not ignore bills.
A late payment during underwriting lands like a plot twist nobody wants. It can drop your score, and your debts cannot be past due at closing.
Do not pay an outstanding collection.
This restarts the collection clock, and most collection accounts do not need to be paid to qualify. If a collection needs to be paid, wait and pay it at closing. Discuss this with your lender.
Mortgage Lending Explained is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
Do not quit your job or switch careers.
Unless a company is offering a signing bonus and a yacht, stay put. Job changes during underwriting are the kind of plot twist that can stall or stop your loan.
Do not ignore your lender.
If they ask for a document, send it. Quickly. Do not ghost them like a bad Tinder date. Waiting on paperwork can stall or kill your loan.
Do not withhold life changes.
Got married, divorced, had a baby, or finally sold your vintage Beanie Babies? If it affects money coming in or going out, your lender has to know. If it affects your household size or any legal status, they must know that too.
Do not assume a pre-approval is bulletproof.
It is a snapshot, not a guarantee. Keep your finances stable so the final review matches what they approved at the start.
Do not panic.
The process can feel invasive, but most of it is standard. Sip your coffee, breathe, and answer your emails, texts, and calls.
Avoid Mistakes and Sail Through the Mortgage Process
While I could share plenty of horror stories, there are far more situations where using common credit sense and following these tips helped buyers sail into homeownership with no drama.
Buying a home can feel like a maze, but keeping your credit steady, spending calm, and paperwork in order makes the journey smoother. Avoid common mistakes, follow these tips, and you'll have your new home keys in your hand, not stuck in red tape.
From my family to yours, Happy Thanksgiving!
Got Questions?
I’m here to help. Whether you are starting the process or already deep in it, reach out. Realtors and loan officers can do the same on behalf of clients. I do not sell data and am not affiliated with any lender. My goal is simple: provide insight into mortgage underwriting and help you reach your homeownership goals.
