Pre-approval is a great first step in the mortgage process and is definitely something we encourage among home buyers. It provides insight into your home affordability, it guides your home search and locks in a mortgage product for up to 120 days. It’s important to note, however, that pre-approvals are never 100% and conditional, meaning they can be denied if you don’t maintain the requirements set by your lender.

If you’ve been pre-approved for a mortgage and want to ensure you maintain the qualifications needed if you make a purchase, here are five mistakes to avoid:

1. Making large purchases on credit

Before your mortgage closes, it's wise to avoid racking up your credit card with big purchases if you’re unable to pay it back right away. This can potentially affect both your credit score and debt-to-income ratio (what you can afford), which are two key factors that lenders consider when reviewing your mortgage application. If your credit score and debt-to-income ratio were to change from pre-approval, this could impact your chances of getting final approval. It’s important to remember that lenders can revisit and review your application at any time for closing, which is why we recommend to keep your spending on credit at a minimum while your application is pending.

2. Applying for new credit

The same way large credit card purchases can affect your credit score, so can new credit applications. Any adjustments to your credit between the time you receive your pre-approval to when you finalize your new home purchase can affect your chances of getting the financing you need for your new home. Your lender will likely check your credit again before everything is confirmed, so it’s important not to be mindful when applying for a new credit card or loan after you’ve been pre-approved. Our best advice would be to wait until you have the keys in your hand and your mortgage locked in.

3. Leaving or switching jobs

If you’ve completed the pre-approval process, that means you’ve already provided proof of employment and income. Be cautious about switching your current job before your mortgage closes as there may be a chance that your income will change, which can affect your pre-approval status.

If you are full-time employed, lenders will look for at least three months of income at a specific job to ensure you’re past the probationary period. In the case that you switch to a self-employed job, note that lenders will look for at least two years of tax statements in that same job. If, for any reason, you are terminated or quit your job, the proof of employment and income you initially provided will no longer be valid and there’s a chance your mortgage pre-approval could be denied.

Under some circumstances, career changes can happen quickly and unexpectedly, and sometimes for the better. If you happen to be promoted, it’s a good idea to proactively reach out to your lender and notify them of this change in your employment status to determine if they require any additional documentation. If you are considering leaving your current job and have the flexibility to wait it out, it’s wise to hold off until your application is approved.

4. Failing to respond to lender requests

Occasionally, your lender may send you a request for new or additional information between the time you receive pre-approval and when your mortgage starts. Be sure to respond as quickly as possible to these requests by providing all of the documentation they’re looking for. Failing to provide this information or not responding in a timely manner could affect your pre-approval and mortgage application altogether. When you work with Homewise, your dedicated Mortgage Advisor will stay on top of these lender requests for you and gather the necessary documents in advance to increase your chances of approval.

5. Co-signing a loan

When you co-sign a loan (such as a mortgage for a family member), the debt is shared and will appear on your credit report. By co-signing, you’ve agreed to repay the loan in the event that the primary borrower is unable to pay it themselves. If you’ve been pre-approved for a mortgage and you co-sign a loan, this will be factored into your debt-to-income ratio and considered as your own personal debt on your pending application. Doing this is definitely something you want to avoid as it can considerably impact on your credit and affect your chances of locking in the best mortgage.

In the end, getting a pre-approval is a great way to get yourself ready to buy a home, however, it’s never 100%. To increase the chances of your pre-approval following through when you do purchase a home, avoiding the mistakes above will be important. Looking to get pre-approved now? You can get started here in just five minutes and our team at Homewise will work to get you the best pre-approval from over 30 banks and lenders, giving you the advice you need to buy with confidence.