Sometimes the smartest people do the dumbest things.
So, you’ve found the perfect home, and you’ve been pre-approved for your new mortgage. Your offer was accepted, the home inspection passed, and your loan officer locked you in at an awesome rate. You likely think it’s a done deal.
Um, not quite. You won’t officially be a homeowner for another month or so. And your lender will check your credit again prior to granting you the funds. She might also need additional information from you while processing your loan application.
That means that keeping your finances stable and your credit report accurate for the next 30 days is crucial. So, before you go celebrate, please continue reading.
10 things you should never do before your mortgage closes:
1. Do not ignore questions from your lender or broker
Your lender can’t help you if you don’t promptly share accurate answers to important questions. We know getting a loan can be a hairy process, and we’re here to help.
2. Do not quit or change jobs
This sounds obvious, but it happens frequently. Lenders are looking for stability and predictability. They don’t like surprises. So, even if you expect a big bump in income, hold off committing to a new employer until after your loan is closed.
3. Do not change bank accounts or transfer funds
Lenders not only need to know how much money you have, they like to know where it is. During escrow isn’t the best time to be moving your funds to a different bank, or from account to account. Shuffling cash around only confuses folks — Not a good thing.
4. Do not buy any big-ticket items like a car, boat, or furniture
Even you’re paying cash, forking out thousands (or even hundreds) of dollars for expensive stuff before your loan closes changes your financial position and gives lenders the shakes. We understand the urge to fill your new home with over-priced Italian furniture, but please don’t do it until after your loan is closed and you’re sure you can afford it.
5. Do not open, close, or pay off any bank or charge accounts
Don’t apply for any new loans, credit lines or credit cards. And, just as important, don’t close any credit accounts either. Also, if you pay off accounts while a loan is in process, the lender will want to know where the money came from. All of these actions can change your credit report and credit score — The two main determinants of your mortgage-worthiness.
Sometimes life throws you curves and you need to adapt. That’s okay. If you need to bend any of these rules, just be sure to consult with your loan officer FIRST. This will minimize the chances of your loan being delayed (or worse).
6. Do not pay any bills late
Late payments can kill a good credit score. Be aware of when you usually get billed, and make sure stuff gets paid on time. It’s really easy to space-out on a due bill that got lost in the mail.
7. Do not let anyone run a credit check on you
Don’t let anybody touch your credit report, including yourself. Don’t even look at it. You could make a harmless inquiry that causes a delay in your closing.
8. Other than your regular income, do not make any large deposits to your bank account
Your lender’s not being nosy, she just needs to understand your cash flow. Unexplained deposits can indicate that you took out a loan or got a cash advance, then deposited the proceeds into your account. If you absolutely have to make a large deposit, talk to your lender first — Chances are, the funds will need to be explained and verified.
9. Do not co-sign a loan with anyone
Lenders always examine the worst-case scenario. That’s their job. If your buddy or relative defaults, your on the hook for another loan payment.
10. Do not acquire any new debt
If you take on any new debt that you didn’t mention on your mortgage application, it calls into question whether you’ll be able to pay your bills once you add a mortgage into the mix. Even common purchases associated with a new home can be dangerous. Also, do not buy anything with a credit card or put an item on layaway. Nothing.
Take your time
Depending on your personal situation, you should take some time to get comfortable with your new mortgage payment. After that, it’s probably okay to splurge on new kitchen appliances, or take that vacation to Tuscany. But doing so before your loan actually funds could potentially put buying your dream home in jeopardy.