Do’s and Don’ts of Home Loans

Dos Donts when purchasing a home with top Dallas Mortgage Lender
We’ll be honest, we mostly have “DON’Ts” for the home loan process.  These are some of the most common reasons for undue stress and “rough” closings in the mortgage loan process.

To be clear, we’re not saying you can’t do any of these things. We’re just saying don’t do them without calling us first. We’ll council you on how to move forward and what documentation will be required for underwriting.

Do’s and Don’t of Home Loans

The best advise is to live your life “normal” and don’t do anything major without consulting a lender first. Anything that will impact your credit or finances should be addressed before it happens.

  • don’t re-pull your credit
  • don’t open any new credit
  • don’t buy anything major
  • don’t make any “random” deposits
  • don’t borrow money
  • don’t transfer money around or close bank accounts
  • don’t quit, retire, or give notice to your employer
  • don’t get a new job or take a new position
  • don’t change pay structure

In conclusion, lock yourself in a closet and don’t do anything until after closing.

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Credit Changes

Don’t do anything that impacts your credit scores or debt obligations.

Don’t re-repull your credit

Having your credit pulled will result in additional paperwork. Every credit inquiry within 120 days of closing will need to be explained with a “Credit Inquiry Letter”. Lenders do update the inquiries right before closing.

Don’t open any new credit

Do NOT procure any new loans or acquire any new debt. Don’t open any credit cards (even if they’re a zero balance), don’t buy a new car, don’t pull out money on your HELOC, etc..

Don’t buy anything major

Don’t make any major purchases before closing on your home loan. This includes appliances, furniture, cars, etc.. Call us if you truly need to make these purchases in advance. We’ll review your profile and ensure you can proceed without jeopardizing your mortgage approval.

Bank Statements

Financial Statements for Proof of Funds

This section (in our opinion) is the biggest nuisance in the whole paperwork process – read carefully.

Don’t make “random” deposits

Do NOT make random deposits into your bank accounts. Any deposits that aren’t from an “obvious” source (like your employer, social security, the VA, the IRS, etc.) will be scrutinized and require documentation.

So don’t deposit that $5,000 you have at home under your mattress, we can’t use it if you do. If someone owes you money or wants to help, don’t deposit their checks (or accept cash). Instead, call us and we’ll walk you through the details of what to do.

Don’t borrow any funds (or take repayments)

Don’t go borrowing money before closing. This includes borrowing from a bank, friend, or family member. You may be able to accept the money as gift funds if done properly. Call us first.

Don’t transfer money or close accounts

Don’t transfer money from one account to another and/or close bank accounts during the process. Title companies can accept multiple wire transfers and cashier’s checks from various accounts so there’s no need to “consolidate” your accounts.

Transferring funds between accounts will require updating all account statements to show the money going between accounts. Moreover, if you close an account it makes it increasingly more difficult to get documentation when you’re no longer a customer.

Employment & Job Changes

Loan Packing Process with Dallas Top Mortgage Lender

Don’t quit, retire, or give notice

This seems obvious but it happens more than you would think. Do not quit your job, announce your retirement, give your two week notice, etc..

Mortgage lenders are required to contact your employer to verify employment a few days before closing. One of the questions asks about the likelihood of your employment. Problems occur if their response is anything less than absolute.

Don’t take new job or position

Congratulations on finding that new job that pays you double. Now don’t quit. Don’t start the new job until you’ll spoken with us and discussed the details. See above about quitting.

Don’t even take that new opening within your current company without calling us first. Despite it being with the same employer, it too could create issues depending on the situation.

Don’t change pay or compensation structure

Changing pay structures, even for more money, can cause major problems with your approval. Call us before making any change in your compensation. Ex: going from salary to commission, adding additional OT, switching from W2 to 1099 Contracting, etc..