Ten Common Mistakes Buyers Make while Awaiting Mortgage Processing


So, you have found the perfect home, your agent has helped you negotiate the contract and a great deal. What’s next? It’s time to apply for your mortgage. Once you make your formal mortgage application the processor will begin to compile the necessary items to put your file together for underwriting and review. These items will include but not be limited to: tax returns, pay stubs, bank account statements, credit reports, etc. You may have a fantastic credit score and report, a great job, and a strong debt to income ratio but there are some very common mistakes that could affect your ability to be approved for a mortgage. Check some out below.


  1. Change of Employment – Lenders look at job history to determine your income stability and ability to repay the mortgage. This is not the time to change jobs or decide to become self-employed or even worse, unemployed.
  2. Purchasing a new vehicle – This will hurt your debt to income ratio and lenders look at debt to income ratio to determine your ability to repay. This is not the time to purchase a new car unless you have the ability to pay for it with cash (see #4 below).
  3. Applying for New Credit Accounts – Your lender will pull your credit report to determine how much outstanding debt you currently have. They will also look at your credit limits on any open credit accounts. If you have high limits or multiple credit cards your lender will look at this negatively because you have the ability to spend more and therefore have higher debt which could affect your ability to repay the mortgage.
  4. Spending your Savings – If you have set aside some savings money to make your down payment and pay your closing costs do not spend it. You will need money to close on your new home, now is not the time to spend it on anything except the closing of your home.
  5. Be Complete and Truthful on the Mortgage Application – Do not forget any debts you may have when completing your mortgage application. It may help to put together a list of your outstanding monthly bills and expenses. Don’t forget your student loans if any and all of your credit cards no matter how small the balance and monthly payment. The lender will need all of your current info to help with the loan approval process. They will find anything you may have omitted or forgotten about and that will affect your approval.
  6. Purchasing Furniture – See #3 above – Don’t go the furniture store and purchase an all new bedroom or dining room set for your new home until after closing. Applying for any new credit, even those very enticing 0% down deals at the local furniture warehouse, will cause problems with your approval.
  7. Cash Deposits into Bank Accounts – Think of this as “mattress money.” Your lender will review your bank statements going back several months. It is imperative that there is a paper trail for any deposits into your bank accounts. If you have been saving some cash in your “mattress” now is not the time to deposit it into your savings or checking account. The lender looks at this as it could be a potential gift or loan from a 3rd party, either are unacceptable when you are applying for a mortgage.
  8. Credit Report Inquiries – Usually called “hard” hits to your credit report. These happen when you apply for credit accounts. This lowers your credit score and also shows that you are applying to borrow money, whether a mortgage, auto financing, or credit card. Again, your lender will look at this negatively because this will increase your debt to income ratio therefore affecting your ability to repay the mortgage.
  9. Changing Primary Banks – This is not the time to leave one bank and change your primary accounts to a new bank. Your lender is going to want to see your complete financial history prior to approving your mortgage. When you change banks, it affects the lender’s ability to review a chain of history in your banking relationships. If you are not satisfied with your current checking account wait until after you close on your home to find your new bank.
  10. Co-signing a Loan or Credit Account – Do NOT co-sign any debt for your family member or friend. You become a responsible party to the debt when you co-sign for a debt account. It could be a mortgage, student loan, credit card, etc. This will increase your debt to income ratio and affect your mortgage approval.


These 10 mistakes are common ones made by many buyers during loan processing. Hopefully, you can use this list to avoid some pitfalls and expedite your mortgage processing.