Protect Your Pre Approval for a Great Home Loan
Securing a mortgage pre approval is a major step in buying your dream home. But did you know your actions during the home-buying process can affect your approval? Understanding how to safeguard this critical step ensures you remain eligible for favorable rates and terms. Let’s explore the do’s and don’ts that can help.
The Do’s of Protecting Your Pre Approval
1. Do Stay Current on Existing Accounts
Pay all your bills on time. Even one late payment can negatively affect your credit score and jeopardize your eligibility.
2. Do Continue to Use Your Credit as Normal
Lenders look for consistency in credit habits. Avoid making any drastic changes, as it could raise red flags.
3. Do Call Your Mortgage Loan Professional First
If you have questions, always consult your loan officer. They can guide you on financial decisions that might impact your loan process.
The Don’ts of Protecting Your Pre Approval
1. Don’t Apply for New Credit
Applying for new credit or co-signing a loan can hurt your score. To protect your pre approval, avoid having your credit pulled during the loan process.
2. Don’t Max Out Your Credit Cards
Using more than 30% of your available credit limit can lower your credit score. Protect your pre-approval by keeping credit usage minimal and balanced across all cards.
3. Don’t Consolidate Debt
Debt consolidation can make it seem like you’ve maxed out your credit cards, which could harm your credit score. Protect your pre-approval by leaving existing balances as they are.
4. Don’t Close Credit Card Accounts
Closing accounts shortens your credit history and lowers your credit utilization ratio. Protect your pre-approval by keeping all accounts open, even if unused.
5. Don’t Pay Off Collections or Charge-Offs
While paying off debts seems logical, doing so can harm your score. If necessary, address these through escrow at closing to protect your pre-approval.
6. Don’t Transfer Money Between Accounts
Unexplained bank transfers may raise lender concerns. Protect your pre approval by keeping all financial activity clear and well-documented.
7. Don’t Withdraw or Deposit Large Sums
Large transactions can trigger lender questions. Protect your pre-approval by maintaining consistent account balances and documenting any necessary changes.
8. Don’t Make Career Moves
Job changes during the loan process can disrupt your approval. To protect your pre-approval, discuss any career opportunities with your mortgage professional before proceeding.
9. Don’t Let Bank Accounts Go Into the Red
Overdrafts can disqualify accounts from being used in your loan application. Protect your pre-approval by ensuring all accounts remain in good standing.
10. Don’t Let Others Pay for Home-Related Costs
Any gifts or financial help must adhere to lending guidelines and be documented. Protect your pre-approval by avoiding unapproved contributions.
11. Don’t Keep Cash in a Safe or Overseas Account
Funds for your down payment must be accessible and traceable. Protect your pre approval by depositing cash into a U.S. bank account early.
12. Don’t Share Personal Information Carelessly
Sharing your personal information may lead to additional credit checks. Protect your pre approval by safeguarding your credit during the loan process.
Why Protecting Your Pre Approval Matters
Your pre approval is based on your current financial situation, credit score, and income. Changes during the loan process can lead to higher interest rates, loan denial, or delays in closing. By following these tips, you can protect your pre approval and secure a great loan with favorable terms.
Need Help? Contact Us Today!
Want to learn more about how to protect your pre approval? Our team at Crimson Realty is here to help! Contact us for expert advice and guidance throughout your home-buying journey. Visit our Facebook Page for more tips, updates, and listings.
