How Not To Lose Your Loan Approval

Congratulations! After months of building up your credit score and watching your finances carefully, you were approved for your loan. You can finally exhale and relax, right?

Not so fast.

The time between approval and closing is still critical because any changes to your financial status and credit position could result in losing your loan approval. To help ensure this doesn’t happen to you, you’ll need to continue to monitor your finances and not make any changes to what got you the loan in the first place.

Here are six things to avoid following your loan approval:

1) Don’t make any major purchase. Major purchases—such as a new car—can drastically change your financial situation and, ultimately, your loan approval status. A sudden drop in your bank account balance or an increase in your debt-to-income ratio may be a red flag to your lender.

2) Don’t change your job status. Similarly, a change in your income stream could be cause for you to lose your loan approval. Although a termination may be out of your control, there are other things you can control such as quitting your job, changing jobs or taking on a new position that is commission-based.

3) Don’t move around large sums of money. Not only should you not move large amounts of money between bank accounts (such as transfers from checking accounts to savings accounts, etc.), but you should also not make any changes to an IRA or to a 401k. Any changes in balances or contribution amounts will change the information on your loan application—after the fact.

4) Don’t open new lines of credit. Much like avoiding major purchases, you should also avoid opening new lines of credit, especially credit cards. Since available credit is a factor in the loan approval process, getting a new credit card—even one with a low credit limit—is not a good idea.

5) Don’t accept cash gifts. Accepting a cash gift to be used as a down payment is fine—as long as you have the proper documentation such as a gift letter. Without the proper documentation, a cash gift might be perceived as an suspicious spike in your bank account balance.

6) Don’t be late on any payments. Although this should go without saying, paying your bills on time is important, even after you’re approved for a loan. You need to continue to make all of your payments on time and be extra vigilant about any late payments. If you can, pay your bills early.

Even if you haven’t been approved for a loan yet, these six “don’ts” can help you get approved. In the end, keep in mind that even though the interest rates are at historic lows right now, getting—and keeping—a loan approval isn’t always easy. ∆