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Credit Do's and Don'ts in the Mortgage Approval Process

Published: March 2017
Author: Bank of England Mortgage Staff

While pre-qualification allows buyers to know how much they are qualified to borrow for a new home before they start shopping, and it can speed up the mortgage application process once they find a home they like, prospective homebuyers need to keep in mind that pre-qualification is not final approval. Events and decisions affecting a borrower's financial profile that occur after pre-qualification but prior to closing can determine whether or not the loan is ultimately approved.

Especially now, as the mortgage industry adjusts to new financial regulations, it is more important than ever to ensure that the financing of your new home goes smoothly; thanks to the time constraints of the new regulations, even minor bumps can really slow down the process. Following the tips below will make the process go more quickly and smoothly, help to prevent unpleasant surprises, and reduce the stress of the approval process.

Do:

• Make mortgage or rent payments on time.
• Pay all bills on time.
• Stay with the same employer.
• Stay with the same insurer.
• Continue living at your current residence.
• Keep credit card balances at or below 40% of credit limits.
• Call your lender before doing anything regarding your employment, credit cards or assets.
• Ask your agent or seller if the property is in a flood zone as you may be required to obtain flood insurance.
• Notify your lender of any changes to the sales contract (closing date, sales price, etc.)
• Provide a copy of both sides of your earnest money check after it has cleared your bank, along with a bank statement reflecting the withdrawal.
• Promptly provide legible copies of all pages of each document requested by your lender throughout the mortgage process.
• Provide your lender with contact information from your homeowner's insurance agent.
• Communicate openly and honestly.

Don't:

• Make any major purchases (car, boat, etc.).
• Take out any large cash advances.
• Apply for new credit cards or loans of any kind.
• Pay off any collections or charge-offs before consulting your lender.
• Bounce any checks or overdraft any accounts.
• Change bank accounts or banks unless advised by the lender.
• Consolidate your debt into fewer accounts.
• Start any home improvement projects.
• Deposit cash or non-traceable funds.
• Close credit card accounts.
• Borrow money.
• Transfer checking or savings balances from one account to another.
• Max out or overcharge existing cards.
• Quit or change jobs.
• Do anything that might raise red flags for the underwriter (co-signing on another person's loan, changing your name and address, etc.).
• Plan a vacation during your loan transaction without informing your loan officer.
• Give notice to your landlord before consulting your loan officer.
• Take it personally if you're requested to provide additional information about your income or deposits. All information will remain completely confidential.
• Hesitate to contact your lender with any questions throughout the process. They are there to help!

Bank of England Mortgage is always happy to help educate homebuyers. We'll help you gain an understanding of the mortgage process so you can make the best choices for your home financing goals.