What Do Buyers Do to Derail Their Ability to Secure a Mortgage?

Even after you get pre-approved to buy a home in St. George, there are some common mistakes you can make that will derail the process. Some of them seem small, but they can have a big impact on your credit profile, debt-to-income ratio, or overall financial stability in the eyes of a lender. We have some tips to help you avoid common blunders that can compromise your ability to close on the home.

Changing Jobs or Your Income Source

If an opportunity to change jobs or income sources arises, remember that now is not the time to make that change. Do whatever you can to delay the change until after closing on the home. 

Lenders want to see stable, consistent income. So, if you switch jobs, go from a salaried position to self-employed or contract work, or simply take time off work, it can change how you look to mortgage underwriters. A change like these could delay or even disqualify your mortgage approval. If you're planning a career change, it's usually best to wait until after closing.

New Debt

After having an offer accepted, it's quite common for buyers to begin looking for furniture or appliances for the home. Many buyers also find themselves taking on new debt in celebration of the milestone, or out of necessity, like replacing a vehicle or taking a vacation. Whatever the source of debt, it will change your DTI and can impact your ability to qualify for the mortgage. Even if you still ultimately qualify, it may cause delays because underwriters will need to review it all again.

Simply put: Thinking of buying a new car, furniture, or opening a credit card during your home search? Don’t. Just wait until after closing. 

Large Deposits without Documentation

It seems strange to some buyers that money being added to the account could be a problem, but it's true. Lenders track your assets closely, and large, unexplained deposits into your bank account (especially cash) can raise red flags. You’ll need to prove where the money came from—so if someone is gifting you funds for your down payment, make sure it’s documented properly.

Making Big Purchases (From Savings)

Similarly to the risk of buying something on credit, a big purchase you pay cash for can also be an issue. If you drain your savings for other purchases (vacations, weddings, home décor), you may no longer have enough for the required down payment or closing costs. Don't mess with your savings while you're in escrow, especially when you're still ruling out appraisal gaps, finding out what your closing costs will be, or waiting to negotiate details after the inspection or final walkthrough.

Co-Signing for Someone Else

If you're in a strong financial position and have good credit, you may have friends or family request that you co-sign on a loan for them. This can be a generous way to help a loved one reach their goals, but avoid doing so during the home buying process. 

Even if you’re not the one making the payments, co-signing adds liability to your name. That extra debt can hurt your debt-to-income ratio and make it harder to qualify.

Erika Rogers says, "Once you’re thinking about buying a home—or especially once you’re pre-approved—it’s best to keep your financial life as steady and predictable as possible. If you're unsure whether something will impact your mortgage qualification, ask your lender before making the move." If you want to learn more about homes for sale in St. George, we're here to help. Contact us any time to get started.