After you have applied for a home loan, it is crucial to be mindful of your spending habits. This doesn't mean you can't enjoy your life – you just need to be careful about any significant financial decisions. 

Things to Avoid Until Final Loan Approval

We have come up with five scenarios you may not realize you need to avoid after applying for your home loan.

# 1. Steer Clear of Cash Deposits

Sourcing funds for a loan can be tricky, and lenders must be diligent in ensuring that all the money you are using comes from legitimate sources. 


One type of funding that can occasionally pose a problem is cash. 

While getting the money you need may seem easy, cash can be challenging to track and document. As a result, before you deposit any cash into your accounts, discussing the proper way to document your transactions with your loan officer is essential; this will help to ensure that your loan is approved without any delays or issues.

#2. Steer Clear of Large Purchases

It may seem like common sense to avoid making large purchases before buying a home; you may be surprised how many people are unaware of how large purchases can jeopardize their loans. 

Lenders look at your debt-to-income ratio when considering you for a loan; any new debt can raise this ratio and make you a riskier borrower. 


Even if you think you can still afford the mortgage payments, the lender may disagree and deny your loan. It's wise to put off any major purchases until after you've closed on your new home.

#3. Steer Clear of Large Transfers

Sourcing and tracking assets are crucial parts of the lending process. 

Lenders need to know where your assets are located and how they perform to make informed decisions about your loan. 


When there is consistency among your accounts, it makes it easier for lenders to source and track your assets. 

Before transferring money, speak with your loan officer to ensure that the lender can track the asset transfers. Doing so can help ensure that your loan is approved and that you get the best possible terms.

#4. Steer Clear of Closing Credit Accounts

It's a common misconception that closing credit accounts will improve your credit score. Closing accounts can harm your score. One significant component of your score is your length and depth of credit history. 

Closing accounts will shorten your history, making you seem like a less reliable borrower, and can lead to a lower credit score. 


If you're trying to improve your credit score, it's best to keep your accounts open and use them responsibly.

Before making any large purchases or moving money around, it's vital to consult your lender. Your lender can explain how your financial decisions may impact your home loan and help you avoid potential pitfalls. Doing this can help ensure that your home purchase goes as smoothly as possible.

The Glass House Real Estate Team

The Glass House Real Estate Team

We are passionate about empowering home buyers and sellers. Our team brings a wealth of knowledge and experience. We will help you seamlessly navigate the home buying or selling process stress-free.