You have accomplished something pretty cool, you are now pre-approved to buy a home.

Hopefully, you understand all the important pieces of the potential process you will go through once you find a home and how the mortgage will work. You understand your costs and your possible cash to close? You understand how interest rates work and what ranges you could have depending on different situations coming into play? You understand your possible monthly payment ranges, the programs you are approved for, the properties you can look at, and what time frames you can close in?

If you understand all of that, and are comfortable with everything, it is time to start looking for homes.

But looking for homes can sometimes take a little bit of time. So, let’s review the important information you should keep top of mind while you are looking for the right property. There are a few big pieces to remember.

1. Do not have your credit pulled or open any new loans– You are currently approved at the ranges you are approved for based on your current debts and current income. If you go out shopping and get a new loan, this means your debts are increasing and your monthly debt payments are increasing as well. Depending on your approval, any increase in your debt load could make it so you no longer qualify for the home prices you were originally approved for. And if you have your credit pulled or checked, that will be a flag to the lender that you are looking for new debt and cause you to answer for the credit being pulled. Do not open up any new debt or have your credit pulled without first checking with your loan officer to make sure it won’t affect your pre-approval.
2. Do not spend a lot of money – Another factor in your approval could likely be how much money you are showing in the bank and in your investments. If the loan officer needs to show that amount of money to keep an approval for you, spending a good check of those funds could make it so you are no longer approved. Normal, everyday spending is perfectly fine, but any larger purchases or any type of larger withdrawal from your asset accounts needs to first be reviewed with you loan officer.
3. Do not transfer around large sums of money in your bank accounts – Transferring money and depositing money into your bank account, or moving money from one bank to another in large sums, will likely cause issues with documentation for your approval. The government requires lenders to source any large deposit coming into someone’s bank account to make sure there is not money laundering activities going on. If you sell something, get a gift, move money from a different account and so on, and the deposit into your account is large enough, you cannot use that money unless it is documented where the money came from. Best case scenario, it causes you to have to provide more documentation to the loan officer than originally required. Worst case scenario, if you cannot prove where the money came from because you do not have documentation for it (think random cash), that money cannot be used to qualify for a mortgage or home purchase. Keep your bank accounts simple and ask your loan officer if more than 50% of your normal monthly income would be getting deposited into a bank account, to make sure it won’t cause issues.
4. Do not quit your job – Hopefully this is a no-brainer comment, but people quit their job or do something to get fired in the middle of home purchase transactions all the time. Less than 10 days from closing the lender has to verify you are still employed with your current employer. If you are not, you do not get to buy the home (unless you are already re-employed and the government program approves using the income right away). Keep your job steady while looking at homes or let your loan officer know well beforehand if there may be any job changes.
5. Tell your lender quickly if you are going to get a pay raise or a large bonus/commission – Many times pay raises will only help with qualifying, but sometimes it can cause issues. Many people use down payment assistance programs or income based programs for buying a home. If you get raises in the middle of buying a home, and that raise pushes your income above the income thresholds of the down payment assistance or low income program, you can lose your approval. Simple answer is just keep your loan officer up to date on any income changes.
6. Do not buy any new vehicles or other large purchases – This goes along with number one (don’t have your credit pulled) and number two (don’t spend a lot of money). So, this should not really need to be stated, but people get a wild hair all the time and buy a new truck or camper (or whatever) and forget to contemplate that this could completely derail their ability to buy a home. Toys can be fun, but you can wait until you close on your home before you get new ones. Keep your excitement in check and keep the loan officer up to date on any wild ideas.
7. Make sure you keep your current credit card balances where they are or lower (preferably lower) – Increasing your credit card balances may mean you are buying big things that you shouldn’t, so this comment may go along with comments #1 and #2, also. But, to a greater extent, the other issue is that if you increase your credit card balances, you will likely see your credit scores drop because of it. 30% of your credit scores are based on what percentage of your revolving credit accounts you are using. So, if you increase your balances on your credit cards, you could likely see your credit scores drop, affecting your approval, your interest rates, and more. A better scenario would be to continually focus on paying down your credit cards so the balances decrease and give you the opportunity to have your credit scores rise. This could allow you to qualify for more, get better interest rates and so on.

There are other things that should be done (or not done) during your home buying experience. So, stay in touch with your loan office and keep them up to date. If you do see a property you like, let them know before you may make an offer so they can provide you payment numbers, make sure the property is likely to qualify, and review with you that everything is still the same in your file (or close to).

Any questions, read through more of these posts on the Midwest Money Mentor site. If you want more information on improving your credit, check out the first post on that here.

And, for an extra addition that has zero to do with the rest of this post – here is an interesting article that talks about how creating a habit of volunteering can actually improve your health – Click Here