Whether you are buying a new home, refinancing, or getting a home equity loan, your credit report may be the most important thing that affects whether your mortgage application is approved, how much your interest rate is, and how much your monthly payment will be. During the application phase, it's important for borrowers to do everything they can to protect their situation. There are a few things borrowers should do while their paperwork is being processed to make sure they get the best rates and terms possible.
Simply put, it's important that borrowers don't hurt their chances of getting the best rate and terms during the application phase of the mortgage. This means they shouldn't do anything with their money that will change their credit profile in a big way. For example, people who want to get a mortgage shouldn't apply for or accept any new credit cards or other loans while their mortgage paperwork is being processed. They should wait to buy big things like cars until after they have moved into their new home and signed all the mortgage papers.
Since the mortgage approval process can take a few weeks or even a few months, lenders often pull a borrower's credit report again right before settlement to look for big changes that could change the terms of their approval. If something new is found, the lender has the right to take back their original offer until more underwriting and consideration can be done.
Also, once the mortgage application has been turned in, borrowers should not move money into or out of their existing bank accounts. Lenders look at how stable a borrower's finances are, so any changes in account status or balances that are easy to see could change the terms of approval and/or the interest rates. Borrowers should know that they should keep doing what they do every day, and nothing out of the ordinary should be brought to the attention of a lender.