Mortgage Do's and Don'ts: What to Protect Between Application and Closing
Once you are approved for a mortgage, the approval is conditional. The lender re-verifies your employment, credit, and financial position right before closing, sometimes the same day. Any material change to your financial profile between approval and closing can delay or cancel your loan. This guide covers every action that can affect your approval and exactly why it matters.
| Action | Do or Don't | Why it matters |
|---|---|---|
| Respond to document requests | DO within 24 hours | Every delay pushes your closing date |
| Change jobs | DON'T without talking to your LO first | Employment is re-verified at closing |
| Apply for new credit | DON'T | New debt changes your DTI and credit score |
| Close credit accounts | DON'T | Reduces available credit and can lower your score |
| Make large cash deposits | DON'T without documentation | All deposits over $200 require source verification |
| Co-sign for anyone | DON'T | Co-signed debt counts in your DTI ratio |
| Pay existing debts on time | DO | Credit is monitored throughout the loan process |
| Wire money without calling first | DON'T | Wire fraud targets real estate closings specifically |
The Core Principle
Your approval is based on a snapshot of your financial life on the day you applied. The lender will take another snapshot right before you close. If the two snapshots are significantly different, the lender has to re-underwrite your loan. That costs you time, money, and sometimes the property.
The rules below are not bureaucratic. Each one exists because it directly affects the three things your approval is based on: your income, your credit, and your assets.
What to Do While Your Loan Is in Process
- Respond to every document request within 24 hours. The mortgage process is sequential. Every stage waits for the previous one. A document that takes three days delays your closing by three days.
- Update your documents when they expire. Any document over 30 days old at closing must be refreshed. This includes pay stubs, bank statements, and letters of explanation.
- Tell your loan officer about employment changes before they happen. A raise, a promotion, a transition from salary to commission, a change of employer, a leave of absence: all of these need to be communicated before you make the move, not after.
- Let your loan officer know if gift funds or a Power of Attorney will be used. Both require lead time and cannot be resolved at the closing table.
- Keep paying all existing debts on time. Your credit is monitored throughout the loan process. A missed payment after your approval can lower your score, change your rate, or trigger a re-underwrite.
- Keep your cash in documented accounts. Any large deposit after application requires documentation of its source. Paper trails matter.
- Notify your loan officer of any address or contact information changes. Disclosures must reach you on a deadline.
What Not to Do While Your Loan Is in Process
- Do not change jobs without talking to your loan officer first. This is the single most common cause of loan delays and cancellations. Your lender verifies your employment status and income on the day of closing. If you are no longer at the employer listed on your application, the loan cannot fund until re-underwriting is complete.
- Do not apply for new credit of any kind. No new credit cards. No car loans. No personal loans. No furniture financing. No buy now pay later accounts. Every new credit application creates a hard inquiry and every new account increases your total monthly debt obligations.
- Do not close existing credit accounts. Closing a credit card reduces your available credit, increases your utilization ratio, and can lower your score. Do not close anything until after you have received your keys.
- Do not make large undocumented deposits. Any deposit over $200 in your bank accounts after application will require documentation of its source. Do not try to simplify your finances by consolidating accounts during the loan process.
- Do not co-sign for anyone. If you co-sign a loan, that debt appears on your credit report and counts in your debt-to-income ratio, even if you never make a payment.
- Do not make large purchases. No new vehicles. No furniture for the new house yet. No appliances, renovations, or large purchases on credit. Wait until after closing.
- Do not change your closing date without telling your loan officer immediately. Closing documents are date-specific and rate locks expire on specific dates.
The Wire Fraud Warning
This section does not appear on most lender guides, but it should.
Real estate wire fraud is one of the fastest-growing financial crimes in the United States. Here is how it works: a fraudster gains access to email communications between a buyer, their real estate agent, their loan officer, and the title company. They send an email that looks like it is from the title company with updated wire instructions. The buyer wires their down payment to a fraudulent account. The money is gone in minutes.
The rule: always call before you wire.
Before sending any amount of money by wire in a real estate transaction: call the title company using a phone number you found independently from their website or your contract, not from the email. Verbally confirm the account number, routing number, and the name on the account. Confirm the expected dollar amount. Then wire.
If the wire instructions changed from a previous communication, stop. Call your loan officer and your real estate agent immediately. Legitimate institutions do not change wire instructions at the last minute.
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Frequently asked
What should you not do during the mortgage process?
Do not apply for new credit, change jobs, make large undocumented deposits, close credit accounts, co-sign for others, or make large purchases. Any of these can change your credit score, debt-to-income ratio, or asset verification, potentially affecting your approval before closing.
Can I change jobs while my mortgage is being processed?
Possibly, but talk to your loan officer before making the move. Changing to a similar role with equal or higher income may be manageable with documentation. Changing industries, going from salary to commission, or becoming self-employed during the loan process can significantly delay or derail your closing.
Will applying for a credit card hurt my mortgage approval?
Yes. A new credit card application creates a hard inquiry that can lower your score 5 to 10 points and adds a new account that affects your profile. Do not apply for any new credit from application through closing, then wait at least two weeks after closing before opening new accounts.
Can I make large deposits into my bank account during the mortgage process?
You can, but any deposit over $200 will require documentation of its source. Lenders verify that your down payment and reserves are your own funds and not borrowed. Keep your documentation ready for any funds that enter your accounts after you apply.
What is wire fraud in real estate and how do I avoid it?
Real estate wire fraud involves fraudsters intercepting your email communications and sending fake wiring instructions for your down payment or closing costs. Before wiring any money, call the title company directly using a number you found independently and verbally confirm the wiring instructions. Never wire based on email instructions alone.
Can my mortgage be denied after approval?
Yes. Lenders re-verify employment, credit, and income before funding, sometimes on the day of closing. A job change, new debt, missed payment, or large unexplained deposit between approval and closing can trigger a re-underwrite or denial. Following the do's and don'ts in this guide protects your approval through closing day.
Mortgage guidelines vary by program, lender, and individual circumstances. Consult your loan officer before making any financial changes during the loan process. Not a commitment to lend. Encompass Lending Group, LP NMLS #292897.
