What Can Affect Your Mortgage Approval?

The “Small” Things

Getting pre-approved is a great first step, but it doesn’t always mean you’re finished. There are several small things that can affect your mortgage approval before your purchase closes.

One of the conversations I have quite often is with buyers who are surprised to learn that a few simple financial changes can impact their approval. Most of these situations are completely avoidable. The key is knowing what lenders are looking for while your mortgage is being finalized.

Financing a Vehicle

This is probably the biggest one.

I’ve had buyers ask if it’s okay to finance a new vehicle after they’ve been pre-approved. My answer is usually, “Let’s talk first.”

A new vehicle payment can increase your monthly debt enough to affect how much you qualify for. Even after you’ve been pre-approved, lenders may review your information again before your mortgage funds, so it’s always best to check with me before making that decision.

Changing Jobs

Starting a new job isn’t necessarily a problem.

However, changing employers or moving from salaried employment to self-employment while you’re buying a home can delay your approval or require additional documentation from your lender.

If you’re considering a career change, it’s worth having a conversation before making the move.

Missing Payments

Life gets busy, and one missed payment probably won’t change everything.

However, repeated late payments can affect your credit and raise questions for lenders.

If you’re planning to buy a home in the next few months, it’s a good idea to stay on top of every payment whenever possible.

Increasing Your Credit Card Balances

I’ve seen buyers continue shopping after they’ve been pre-approved.

The purchases often include:

• New furniture
• Appliances
• Home improvement supplies
• Other large purchases

Before long, those balances can start adding up. Higher credit card balances may affect your debt ratios, even when you’re making the minimum payments on time.

Applying for More Credit

It can be tempting to take advantage of promotional financing or store credit offers.

During the mortgage process, however, it’s usually best to wait until your purchase has closed.

New credit applications can result in additional credit checks and new debt that wasn’t included in your original approval.

What This Can Look Like

Let’s say you’re pre-approved to purchase a home.

A few weeks later, you decide to finance a new truck because you found a great deal. Your monthly vehicle payment increases by several hundred dollars.

When the lender reviews your application before closing, your debt ratios may no longer fit their guidelines. Suddenly, something that seemed unrelated to your home purchase becomes part of the mortgage conversation and could delay your financing or require the lender to reassess your application.

What You Can Do Instead

Until your purchase is complete, try to keep your finances as consistent as possible.

That usually means:

• Avoid financing vehicles or other large purchases
• Don’t apply for new credit cards or loans
• Continue making all payments on time
• Speak with your mortgage broker before making major financial decisions
• Let your broker know if your employment changes

Most of the time, a quick phone call can prevent a much bigger problem later.

Frequently Asked Questions

Can I buy a vehicle after I’m pre-approved?
Possibly, but it’s usually best to wait. Speak with your mortgage broker before purchasing one, as a new vehicle payment can affect your mortgage qualification.

Can I change jobs while buying a home?
Sometimes, yes. Depending on the type of employment change, your lender may need additional information before providing final approval.

Will lenders check my credit again before closing?
Yes, some lenders may. That’s why it’s a good idea to avoid taking on new debt during the mortgage process.

Should I wait to buy furniture until after my mortgage closes?
In many cases, yes. Waiting until after your purchase is complete can help avoid unnecessary complications.

Keep Things Consistent Until Closing

Most mortgage approvals don’t fall apart because of one big mistake. More often, it’s a series of small changes that happen between getting pre-approved and receiving the keys.

I’ve found that keeping your finances as consistent as possible during that time makes the process much smoother. If you’re buying a home and aren’t sure whether a financial decision could affect your mortgage approval, I’m always happy to chat before you make it.

Sometimes a five-minute conversation is all it takes to avoid a much bigger headache later.

Talk soon,
Sarah