3 Mistakes to Avoid When Applying for a Mortgage

Applying for a mortgage is one of the biggest financial decisions you will make. Most people focus on finding the right home and the right rate, but the decisions you make during the application process can be just as important. Lisa Schwark, VP of Mortgage Lending at People Driven Credit Union, sat down with our marketing team to share three mistakes she sees borrowers make, and exactly how to avoid them.

Mistake 1: Changing Jobs Before or During the Process

This is the most common and most damaging mistake. Lenders verify employment before closing, and if you have changed jobs or left your position since you applied, it can stop your loan in its tracks. Stable income in the same line of work is one of the most significant factors in mortgage approval.

Lisa recommends staying at your current job for at least six months to a year before applying, and staying put through the entire process. Each investor has different requirements, but consistency in the same field matters as much as the length of time.

One thing many people do not know: if you recently graduated from college and have been working for six months, you may already qualify. Lisa notes that college transcripts can be used to document the transition from school to work, so you do not necessarily need two years on the job before you apply.

Mistake 2: Charging Up Your Credit Cards

Do not take on new credit card debt between your application and your closing date. This is especially important if your debt-to-income ratio is already close to the limit. Charging up balances raises your credit utilization ratio, which is the percentage of your available credit you are currently using. A higher utilization ratio can lower your credit score and potentially disqualify you from the loan you were already approved for.

The rule is simple. Keep your credit card balances as low as possible from the day you apply until the day you close. Avoid any large purchases on credit during this window. New furniture, appliances, and home improvement supplies can all wait until after closing.

Mistake 3: Making Large Deposits or Withdrawals Without Documentation

Your bank statements are part of the documentation your lender collects and reviews. When an underwriter sees large unexplained deposits or significant withdrawals, it raises red flags. They need to verify that your down payment funds are legitimate and that you are not taking on undisclosed debt to fund them.

If you sold a boat, received a gift from a family member, or moved money between accounts, document it. A paper trail showing the source of any large deposit is essential. Cash deposits without documentation are particularly problematic and can delay or derail your closing.

If you are saving up for a down payment, do it steadily and keep records of every transaction along the way.

Now Is a Great Time to Apply

Many people assume the end of the year is a slow time for home buying, and that is exactly why it can work in your favor. Mortgage volume tends to dip in the fall and winter, which means lenders have more time to give your application the attention it deserves. If you start the process now, you could be positioned to close right after the new year and move into your new home in the spring.

The best way to get started is online. Visit peopledrivencu.org to begin your mortgage application, and our team will reach out to walk you through the next steps. You can also call us at 844-700-PDCU or stop by any of our five Michigan branch locations to speak with someone in person.

All mortgage loans subject to credit approval and membership eligibility. Rates and terms vary based on creditworthiness and loan type. People Driven Credit Union partners with Member First Mortgage for mortgage loan origination. NMLS #776727. Equal Housing Lender. Federally insured by the NCUA.

For more information about mortgage loans visit the PDCU Mortgage Loans webpage.

Disclosures

Equal Housing Lender. Member First Mortgage, LLC (MFM) NMLS ID# 149532. All loans are subject to credit approval. Terms and conditions apply. Program availability is subject to change without notice.

Available to all members using a conventional mortgage loan program on a purchase transaction with People Driven Credit Union in the State of Michigan. Not eligible on multi-unit properties, condos, townhomes, or manufactured houses. The Loan Example is current as of 9/9/2025 and based on a $200,000 loan amount with a conventional 30-year fixed rate term (360 monthly principal and interest payments of $1,231.43); 0% Down Payment; 6.25% Interest Rate with an Annual Percentage Rate (APR) of 6.465%. Rates quoted assume excellent borrower credit history. Payment example does not include taxes and insurance; the actual payment obligation will be higher. The cost of Private Mortgage Insurance (PMI) is waived as part of this promotion, to be paid by the Lender. This is not a commitment to lend. All lending products are subject to credit and property approval. Additional restrictions may apply. Member First Mortgage, LLC (MFM) is a partner of People Driven Credit Union. Michelle Dzon #401292, is authorized to act as agent of People Driven Credit Union (24333 Lahser Road, Southfield, MI 48033 | (248) 263.4100 | NMLS ID: 776727) and is authorized to represent Member First Mortgage, LLC, a licensed Mortgage Lender/Servicer (Corporate Office: 616 44th Street SE, Grand Rapids, MI 49548 | (616) 538.1818 | NMLS ID: 149532). For licensing information, please visit www.nmlsconsumeraccess.org. Equal Housing Opportunity.

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People Driven Credit Union is an Equal Housing Opportunity Lender NMLS #776727