8 Ways to Blow Up Your Financing When Buying a Home

8 Ways to Blow Up Your Financing When Buying a Home

Congratulations your offer was accepted and you’re now under contract! However, if you’re obtaining a mortgage you’re not out of the woods yet. There are numerous things that can blow up your financing and below are the top 8 mistakes homebuyers make during the loan process that can blow up their financing.

8 Ways to Blow Up your Financing when Buying a Home

Top 8 Ways to Blow Up Your Financing

1. Job Change
When applying for a mortgage lenders will assess your financial stability and ability to repay a loan. A big part of that assessment is looking at your employment and income. So if you change jobs, or quit your job during the loan approval process it can easily impact your eligibility for financing. The same holds true if you work fewer hours decreasing your income.

However, it’s important to keep in mind that the mortgage approval processes will vary from lender to lender. Some lenders may have more lenient criteria while others do not and the slightest change in your finances can blow up your financing.

2. Big Expenses
Once a buyer finds their dream home it’s not uncommon for them to start planning and preparing for their move. Sometimes this involves purchasing big-ticketed items like furniture or appliances for their new home. This way once they close they won’t have to wait several more weeks or months to receive these items. However, making any purchases during the loan approval process can easily lead to loan denial.

Lenders will always evaluate and re-evaluate your debt-to-income ratio and credit score throughout the loan approval process. So if either were to change, which can happen when big purchases are made, you can find yourself with a denial letter. The same holds true if you start using your down payment funds to purchase big-ticketed items. Even if you plan on replacing the money prior to closing this too can negatively impact your loan eligibility.

3. Credit Check
When applying for a mortgage lenders will typically pull your credit report to assess your creditworthiness. This credit inquiry can temporarily impact your credit score resulting in a small decrease.

8 Ways to Blow Up your Financing when Buying a Home - Don't Go on a Shopping SpreeHowever, if multiple lenders are pulling your credit within a short period of time the credit scoring system usually takes this into consideration and may only count every lender inquiry as one, which shouldn’t negatively impact your credit score.

With that being said if other financial institutions start pulling your credit, like a car dealership or credit card company it might negatively impact your credit score. Multiple credit inquiries may signal to lenders that you are actively seeking credit and may be financially stretched, which can be viewed as a potential risk and in turn blow up your financing.

So you’ll want to avoid having your credit pulled during the home-buying process. The only institute that should be pulling your credit is your lender.

4. Credit Charges
A majority of people use their credit cards to pay for everything. From groceries to dining to paying their electric bill using a credit card has become the norm. However, when going through the loan approval process you should limit your credit card usage.

Now, this doesn’t mean you should stop using your credit card altogether. It simply means don’t increase your credit card debt because doing so can negatively impact your debt-to-income ratio and in turn your loan eligibility. You’ll also want to keep all of the credit cards you have, you shouldn’t open or close credit accounts unless your mortgage lender advises differently.

Just because you're pre-approved for a mortgage doesn't mean it's a done deal! Here are 8 things to avoid, so you don't blow up your financing. #homebuying #realestate Click to Tweet

Ways to Blow Up Your Financing (Continued)

5. Savings
The money you have sitting in savings should remain in savings during the loan approval process. Moving money around can create major issues during the loan underwriting process and can ultimately cause loan denial. Even if you plan on replacing the funds prior to closing it can still be an issue.

With that being said if you have to use some of your savings before doing so have a conversation with your lender. They may be able to shed some light on how doing so will impact your loan eligibility and may offer alternatives.

6. Deposits
Never make big deposits into your bank account during the loan approval process because it can easily blow up your financing. While cash is usually king and the more the merry, unfortunately, that is not the case when obtaining a mortgage. Your “money trail” needs to remain the same, you shouldn’t have any big deposits or withdrawals.

However, if you have cash to deposit speak with your lender first because you might be able to deposit some money. Your lender will be able to guide you on what to do and what not to do during the loan approval process.

7. Bill Pay
It’s easy to lose track of time and due dates when you’re in the middle of buying a house. So paying a bill a few days late or forgetting to pay it altogether isn’t uncommon. However, it’s imperative you pay all of your bills on time during the loan approval process. While making a few late payments may not be recorded on your credit until after closing it’s not worth the risk. Some creditors report late payments immediately, so if you’re not closing for several more weeks those late payments can blow up your financing.

8. Switching Banks
Moving your bank accounts during the loan approval process can potentially complicate the verification process for the lender. It’s generally recommended to avoid making significant changes to your financial accounts or transferring funds while your loan is being processed, as it may require additional documentation and cause delays or concerns for the lender. However, if it can’t be avoided it’s best to consult with your mortgage lender before doing so.

Final Thoughts

In order to make it to the closing table and successfully close on your new home it’s imperative you don’t make any of these mistakes during the loan approval process. Even if what you’re doing doesn’t seem like a big deal, such as depositing cash into your bank account, it absolutely can. So before you do anything out of the ordinary speak with your loan officer first. They’ll be able to guide you through the lending process and make sure you don’t blow up your financing.

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Just because you're pre-approved for a mortgage doesn't mean it's a done deal! Here are 8 things to avoid, so you don't blow up your financing. #homebuying #realestate Click to Tweet

Additional Home Buying Resources

There are so many mistakes buyers can easily make when purchasing a home. In fact, the list of potential mistakes and things buyers should avoid during the home-buying process is a mile long. Several of the mistakes revolve around the mortgage approval process and here are the top 12 mortgage mistakes buyers should avoid to ensure a smooth real estate transaction.

In addition to making mistakes in obtaining a mortgage buyers also make mistakes when it comes to hiring a Realtor. Buyers often think they can not only find a home on their own but buy one with a Realtor too. Sure, buyers don’t necessarily have to work with a Realtor, but at what cost? Not working with a top Realtor buyers are sure to miss out on great homes, lose during the negotiation process, and get lost during the transaction itself.

Now, not all Realtors are created equal, so it’s important to find an experienced Realtor who goes above and beyond for their clients and has the skill set to obtain the best deal. The home buying process can be stressful, but if buyers work with the right Realtor the process will become a lot easier and maybe even enjoyable. So before stepping foot inside a home buyers should interview Realtors and hire the best one.

About the Author

Top Wellington Realtor, Michelle Gibson, wrote: “8 Ways to Blow Up Your Financing When Buying a Home”

Michelle has been specializing in residential real estate since 2001 throughout Wellington Florida and the surrounding area. Whether you’re looking to buy, sell or rent she will guide you through the entire real estate transaction. If you’re ready to put Michelle’s knowledge and expertise to work for you call or e-mail her today.

Areas of service include WellingtonLake WorthRoyal Palm BeachBoynton BeachWest Palm BeachLoxahatcheeGreenacres, and more.

8 Ways to Blow Up Your Financing When Buying a Home

1 thought on “8 Ways to Blow Up Your Financing When Buying a Home”

  1. Buyers with financing really need to know this and sab\ve any types of purchases until after they close on their new home.

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Michelle Gibson Wellington Florida REALTORMichelle Gibson of the Hansen Real Estate Group Inc is a full-time REALTOR who has been specializing in Wellington Florida real estate since 2001. This veteran of the real estate industry has expertise in technology, marketing, and social media.


Hansen Real Estate Group Inc. is a full-service real estate brokerage specializing in residential real estate. As a customer-focused, quality organization, we achieve success one client at a time. Call 561-333-0446 or e-mail me today at [email protected].

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