Buying a new home can be a lengthy and confused process. Even though mortgage lenders approve home loan requests quickly, many factors can affect the actual loan closing. Persons unfamiliar with the buying process can jeopardize their approval status. To qualify for a home loan, an applicant must have adequate credit, sufficient income, and a moderate debt-to-income ratio.

Furthermore, mortgage lenders prefer stability. Upon receiving a home loan approval, some people make the mistake of acquiring additional significant debt, quitting their jobs, and so forth. To assure a homebuyer's ability to repay a loan, mortgage lenders verify credit and income shortly before closing. If the borrower's financial situation has changed since the initial loan approval, the mortgage lender can cancel the loan agreement.

Buyers should understand a few basic rules that are certain to smooth the mortgage process. Mortgage lenders take a gamble with every loan. While the majority of borrowers will repay the loan in a timely manner, a certain percentage will stop submitting payments or submit late payments. Thus, mortgage loan requirements are very exact. Borrowers with shaky income or credit may not get approved. Moreover, a pre-approval does not guarantee a loan. To avoid an unpleasant surprise at closing, consider the following three things to avoid when buying a house.

Mortgage lenders determine how much house you can afford using a debt-to-income ratio. The percentage of allowable debt varies from lender to lender. Once a mortgage loan application is submitted, the lender will review your credit and evaluate current debts verses income. Using a basic formula, the lender will determine an affordable loan amount and remit a pre-approval letter.

Creating new debts once a pre-approval letter is received can have a negative effect on the ultimate loan approval. Using a credit card for small purchases is acceptable. On the other hand, if you decide to finance a new vehicle or incur thousands of dollars of new credit card debt before closing, this increases your debt-to-income ratio, which can lower your qualifying loan amount.

Mortgage lenders routinely pull your credit report shortly before the scheduled loan closing. If new debts are reported, the lender must re-evaluate your approval status. Homebuyers with substantial income are rarely affected. However, if you barely qualified for your purchase amount, a new monthly expense could be problematic. Don't make any large purchases until after the loan closing.

When submitting an application for a home loan, the mortgage lender will request various documents such as paycheck stubs, bank statements, etc. Leaving a paper trail is beneficial. This way, the lender can review your financial history for the past three to six months.

A few days before closing, the lender will request updated copies of bank statements. Lenders become suspicious when a borrower changes bank accounts, closes an account, or receives a large deposit. This slows down the loan process and could delay closing. To keep everything on schedule, don't move your money around unless absolutely necessary.

Whenever possible, never change employers while buying a new home. Your current income plays a huge factor in your affordability. Furthermore, mortgage lenders prefer applicants with the same employer for at least six consecutive months. If your new salary is less, the lender will re-evaluate the loan request. If you must change employers, try and find a job within the same field and with a comparable salary.

Changing employers is less likely to affect salaried or hourly employees because their income is predictable. On the contrary, switching to a commission-based occupation will create a problem because your new income is unknown.

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