Last Updated on September 28, 2026
Protect Your Mortgage Approval: 4 Financial Mistakes to Avoid Before Closing
The period between your initial application and the day you receive your keys is a critical window. While you might be tempted to start preparing for your new life—buying furniture or even switching to a better job—certain financial decisions can bring your home loan to a “screeching halt”.
In a must-watch episode of “Home School,” the experts at loanDepot highlight four common traps that can disrupt the mortgage underwriting process and what you should do instead to stay on track.
Key Takeaways
- Do not transfer funds between bank accounts, as underwriters must track the source of all money used for down payment and closing costs.
- Avoid opening new credit lines or store credit cards, which can lower your credit score and change your ability to qualify.
- Do not finance big purchases like cars or appliances, as this will increase your debt-to-income (DTI) ratio.
- Maintain stable employment and avoid career changes, as moving to a commission-based or self-employed role can complicate final approval.
1. Shifting Funds: The “Moving Money” Trap
It may seem harmless to consolidate your savings, but underwriters have a specific job: they must track the source of every dollar used for your down payment and closing costs.
- The Problem: Constant transfers between accounts make it difficult for the lender to verify the funds. If the money can’t be tracked, it likely won’t be counted toward your qualification.
- Reserve Requirements: Lenders also look for reserves—the total number of mortgage payments you could make with the cash left over after closing. Shifting money can make you appear less liquid than you actually are.
2. Opening New Credit Lines
That 40% discount for signing up for a store credit card might look like a deal, but it could cost you your home.
- The Impact: Opening a new credit card adds a new inquiry and a new account to your credit profile. This can lower your credit score, affect the average age of your credit history, and ultimately change your ability to qualify for the loan.
3. Financing Big Purchases
It is tempting to buy new appliances or a car for your new garage, but making big purchases during the mortgage process is a major red flag.
- DTI Ratio: Financing a large item increases your debt-to-income (DTI) ratio. If your monthly debt obligations rise too high compared to your income, you may no longer meet the requirements for your specific mortgage product.
4. Career Changes or Quitting Your Job
Stability is the name of the game for lenders. While quitting your job seems like an obvious mistake, even a “positive” move to a new company can cause things to get “bumpy”.
- The Risks: Moving from a salaried W-2 position to a commission-based role or becoming self-employed right before closing can drastically change how an underwriter views your income. If you don’t have a steady, verifiable income stream, getting that final approval becomes significantly more complicated.
The Golden Rule: Ask Before You Act
As the team at loanDepot explains, these financial decisions are ultimately yours to make, but they come with consequences that could delay your dreams. The best way to navigate this period is to never make assumptions. If you are considering a financial change, talk to your lender first.
Ready to Move Forward with Confidence?
- Watch the Lesson: Listen and learn by watching the video.
- Talk to a Pro: Have a question about a potential purchase or career move? Contact a loanDepot licensed mortgage professional today for expert guidance.
Transcript: Protect Your Mortgage Approval: 4 Financial Mistakes to Avoid Before Closing
In this episode of loanDepot’s “Home School” series, the lesson highlights four common financial mistakes that can delay or completely derail a mortgage application. The goal is to help borrowers maintain a stable financial profile from application to closing.
4 Things That Can Blow Up a Mortgage Deal
- Moving Money Around: Underwriters must track the source of all funds used for your down payment, closing costs, and reserve requirements—the amount of money left over after closing to cover future mortgage payments [00:11]. If money is constantly shifted between accounts, it becomes difficult to track, and the lender may not be able to count those funds toward your qualification [00:51].
- Opening New Credit Cards: While store discounts for new cards are tempting, opening new lines of credit changes your credit profile [01:04]. This can lower your credit score, decrease the average age of your credit, and negatively impact your debt-to-income (DTI) ratio, potentially disqualifying you from the loan [01:16].
- Making Big Purchases: Financing large items like a new car, furniture, or appliances before your loan closes can disrupt the deal [01:28]. These purchases increase your debt and can lower your credit score right when it needs to stay stable [01:46].
- Changing or Quitting Your Job: Stability of income is crucial for qualification [01:58]. Even if you are moving to a new job, certain changes can “make things bumpy.” For example, switching from a salaried W-2 position to being self-employed or a commission-based role can make it much harder to verify stable income [02:18].
The video concludes with the vital advice to never make assumptions during the mortgage process. Borrowers are encouraged to ask their lender before making any significant financial moves to avoid unintended consequences [03:02].
