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Tips On How Not To Lose A Home Loan After You Are Already Approved

 

Many Pensacola home buyers do not realize that approval for a loan does not guarantee they will get the loan. Buyer behavior after getting the approval can cause the loan to be disapproved by the lender. This can often happen right before closing and ruin everyone’s day.

Remember, your loan approval is based on your current financial and credit status as of the date of the loan approval.

Your lender will check your credit again before closing, and if the lender sees that your financial condition or credit rating has changed, they can refuse to grant you the loan.

Keep these tips in mind for ensuring your loan stays approved.

1.  Do Not Apply For Credit For Any Purchases – This is critical. If you apply for credit to purchase any products, such as automobiles or home furnishings for your anticipated new home, your credit report will reflect that you have applied for credit. Having this extra credit can disqualify your loan. This also includes getting new cell phones and “no payment for xx months” type of deals. Try not to let your credit be pulled for any reason whatsoever.  Credit_Card_On_Keyboard_RS250

2. Do Not Apply For Any Credit Cards – This includes department store or home improvement store charge cards. As far as the lender is concerned, you have just increased your monthly expenses. Even if you don’t charge anything to the card, you have that credit available, and that is what the lender does not want to see.

3. Do Not Make Large Purchases On Credit Cards – Large purchases decrease the amount of available credit you have, and will thus decrease your credit score. Wait until after closing to buy that big screen TV or new riding lawn mower.

4. Do Not Allow Credit Line Increases On Your Current Credit Cards – Increasing your credit lines can have a negative affect on your credit. If any credit card company offers to increase your credit line, tell them to hold off until after you have purchased your new home.

5. Do not close any existing credit card accounts - Credit card accounts that have a good history of payments are good for your credit score. Leave these accounts alone. By closing credit accounts, you are effectively decreasing your available credit, which will decrease your score.

6. Do Not Make Any Large Deposits or Withdrawals From Your Bank Accounts - Many lenders get very suspicious regarding funds being deposited or withdrawn from bank accounts that are not considered “ordinary” based on their research of your credit and banking history. But why would they worry about a large deposit? Good question. Suppose that deposit was from a loan made to you. You would now owe more money than when you applied for the home loan. 

Here are some examples of clients of mine who were buying homes in Pensacola and almost lost their loan approvals. 

I had a client who was moving and had a garage sale. The client made over $1500 at the garage sale. He promptly deposited this money into his bank account. When the lender asked for updated bank statements prior to closing, this $1500 threw up red flags for the lender. The concern was that someone may have loaned my client cash to help buy the house. The client had to explain what happened and assure the lender that he had received no funds that had to be paid back.

Diamond_Ring_RS250Another client decided she would celebrate the purchase of her new home (before closing) by purchasing a beautiful new diamond ring. She opened up a new installment account with the jeweler. The lender noticed this prior to closing and was ready to disapprove the loan. Fortunately, my client was able to get a full refund for the ring and close the installment account.

The best advice I can give is that after being approved for a loan, simply don’t make any large purchases or apply for any new credit of any kind. Also, ensure that your bank statements do not reflect any unusual activity. 

Keep the lenders comfortable until closing. After closing, you can do as you please.

Note that the advice given in this article is strictly for keeping your loan approved. If you are looking to increase your credit score for a future home purchase, these guidelines do not apply. An article on increasing your credit score is coming soon.   

Click on Pensacola Real Estate News for a list of articles indexed by category.

 

  1. Kathy T.

    I love how clean your site feels! I’m getting to write a post for Shak & Jill and plan to link to this snippet you’ve written about not losing a loan once you get approved. Very nicely done!

  2. South Charlotte Real Estate

    Karl,
    This is good information for anyone considering buying a home in Pensacola-frankly anywhere,today. Lenders have always had issues here,but they are more jittery than ever. Terry McDonald Charlotte NC

  3. Karl

    Thank you very much for the compliments. This is an extremely important topic. I am meeting a client to sign a contract tomorrow and I’m giving her a copy of this. Not taking any chances.

  4. North Georgia Mountain Real Estate

    Karl,

    I hope you don’t mind I will share some of this great information with some of my present clients. Sounds to me like you as a Realtor in the Pensacola Real Estate market really know how to consult with your clients. Great job!

    -Chad

  5. Karl

    Thanks for coming by Chad. Please feel free to share and use as you see fit. If this info helps anyone save their loan, that’s what it’s all about.

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