The Do-Not-Do List for Mortgage Applicants What Can Jeopardize Your Home Loan

Once you begin the mortgage process, everything you do from spending habits to job changes can affect whether you’re approved for a loan and make it to the closing table. Many homebuyers don’t realize that even small financial decisions can cause underwriting delays, loan denial, or require a restart of the approval process.

To help you avoid costly mistakes, here is the essential Do Not Do List for Mortgage Applicants a clear guide to what you should never do once you apply for a mortgage.

1. Do Not Change Jobs, Careers, or Employment Type

Your lender approved you based on your current employment, income stability, and job history.
Avoid:

• Switching jobs or employers
• Moving from salary to commission-based work
• Becoming self-employed or contract-based
• Taking unpaid leave or reducing hours

Any change in employment may cause your lender to pause, re-verify, or deny your loan.

2. Do Not Make Large Deposits or Withdrawals Without Documentation

Lenders must verify where your money comes from. Unexplained deposits—cash, apps like Venmo, Zelle, or large transfers—raise red flags.
Avoid:

• Depositing large amounts of cash
• Moving money between multiple accounts
• Accepting large gifts without documentation

If it can’t be “sourced,” lenders may exclude the funds or delay your approval.

3. Do Not Apply for New Credit

New credit checks lower your credit score and signal financial instability.
Do not apply for:

• Credit cards
• Store financing (home furniture, appliances, etc.)
• Auto loans or leases
• “Buy now, pay later” programs

Even if you are approved, lenders will re-run your credit before closing—and new debt can ruin your debt-to-income ratio.

4. Do Not Make Late Payments on Any Bills

Continue paying every bill on time; credit cards, rent, car payments, student loans, utilities. One late payment can drop your credit score and force lenders to re-evaluate your loan.

5. Do Not Close Old Credit Accounts

Closing credit accounts reduces your credit history and increases your credit utilization. This lowers your credit score, even if you're trying to “clean up” your finances.

6. Do Not Co-Sign for Anyone Else’s Loan

If you co-sign for someone else, that debt becomes part of your financial responsibility. Even if they pay, it appears on your credit report and affects your loan approval.

7. Do Not Increase Credit Card Balances or Max Out Cards

Stay below 30% of your credit limit on all cards. Maxing out cards increases your debt-to-income ratio and lowers your credit score, two things lenders watch closely.

8. Do Not Spend Your Down Payment or Closing Funds

The money in your account must stay there until closing. Avoid using those funds for:

• Furniture or appliances
• Vacations
• Weddings, major life events
• Investments or crypto purchases
  Lenders will verify your account balance again right before closing.

9. Do Not Transfer Money Between Accounts Without a Record

Moving money between multiple bank accounts complicates sourcing. If you must transfer funds, document it clearly and keep all transaction records.

10. Do Not Ignore Lender Emails, Deadlines, or Requests

Missing one form or bank statement can delay closing. Respond immediately to requests from your lender, title company, or real estate agent.

11. Do Not Quit, Retire, or Go Self-Employed Before Closing

Lenders will verify your employment the day before or day of closing. If you're no longer employed even if you have savings your loan can be denied on the spot.

12. Do Not File for Divorce, Bankruptcy, or Make Legal Changes Without Notifying Your Lender

Life changes affect ownership, income, debt, and title. Inform your lender before:

• Filing for divorce or legal separation
• Filing bankruptcy
• Taking on new child support or alimony obligations

13. Do Not Buy a Car, Boat, Motorcycle, or RV

Even if the payment “won’t start for 90 days,” lenders still count it as monthly debt. New loans can disqualify your mortgage instantly.

14. Do Not Assume Cash Gifts Can Be Used Freely

If you receive a gift for your down payment:

• It must come from an approved relative
• The donor must sign a gift letter
• Funds must be “sourced and seasoned” in your account
  Undocumented cash gifts are not allowed in mortgage lending.

15. Do Not Go Silent on Your Lender, Agent, or Title Company

Communication matters. If your financial situation changes; job, income, marital status—tell your lender immediately. Surprises at closing cause delays, re-approvals, or denials.

Quick Recap – The Mortgage “Do Not Do” Checklist

❌ Don’t change jobs or income type
❌ Don’t apply for new credit or loans
❌ Don’t make large, unexplained bank deposits
❌ Don’t make late payments or close credit accounts
❌ Don’t co-sign for anyone
❌ Don’t spend your down payment or closing funds
❌ Don’t buy a new car, furniture, or appliances
❌ Don’t ignore communications from your lender or title company

Close With Confidence Work With The Title Guy

Avoiding these mistakes keeps your mortgage on track and helps you get to the closing table without delays or surprises. The Title Guy works closely with lenders, agents, and buyers to ensure a smooth, secure settlement on time, every time.

Need help or have questions before closing? Contact The Title Guy today.