8 Ways To Accidentally “Un-Approve” Your Mortgage  by Dan Green 4/4/11

While Waiting For An Approval, Time Is Your Enemy

It could take up to 60 days for fixed mortgage or 6 months to get to the closing table on a short sale or foreclosure depending on the speed of home appraisal, the amount of time required for bank sign-off, and other random factors (i.e. vacation time, furlough, miscommunications).

During those 6 months, a lot can happen.

You could lose your job, you could get sick, your home could be damaged by a storm. These are things beyond your control, but within the realm of possibility. Each could negate your mortgage approval, thereby kiboshing your deal and, potentially, resulting in the forfeiture of your earnest money.

The longer it takes to close, the more chance for catastrophe, of course. It's one of the reasons why buying bank-owned homes can be risky.

But beyond the things you can't control, there are things you can control. Mortgage approvals are fragile, living things and nothing's done until it's done.  Good behavior matters.

With that in mind, here are 8 things you should absolutely not do between the date of application and the date of funding.  I've been doing this long enough that I can say with certainty: Ignore these rules at your own peril.

Bad Mortgage Behavior, Defined

1. Don't buy a new car or trade-up to a bigger lease
2. Don't quit your job to change industries or start a new company
3. Don't switch from a salaried job to a heavily-commissioned job
4. Don't transfer large sums of money between bank accounts
5. Don't forget to pay your bills -- even the ones in dispute
6. Don't open new credit cards -- even if you're getting 20% off
7. Don't accept a cash gift without filing the proper "gift" paperwork
8. Don't make random, undocumented deposits into your bank account

Now, it may be impractical to have follow every rule to the letter.  I know that.  For example, if your car lease is expiring,  you have to do what you have to do.  But before renewing the lease, check with your loan officer to see if renting a car for the short-term might be a more mortgage-friendly solution instead.

The same goes for accepting cash gifts from parents.  There's a right way and a wrong way to accept a cash gift and, if you do it the "wrong way", you may not get to use the gift as part of your downpayment funds.

There are a bevy of "gotchas" in Mortgageland and you can't expect to know them all. These 8 rules, however, are a good start.

Apply Now

Return to Loan Options