Closing on a home is an exciting time, but it’s also important to be careful about finances so as to not derail the closing process. If you want the process of buying your house to go as smoothly as possible, you need to avoid making any major changes in personal credit before closing – this includes changing jobs! This also applies to borrowers refinancing their mortgages.
We have provided our top 10 tips on mistakes to avoid when closing in on your mortgage.
- You shall not make any large purchases during the home-buying process
- You shall not change jobs, become self-employed or quit
- You shall not spend any of the money saved for your down payment or closing costs
- You shall not make any large deposits without checking with your Mortgage Broker
- You shall not lie on thy application about liabilities or debt
- You shall not finance furniture for the house that you are purchasing
- You shall not change, open, or close bank accounts
- You shall not fall behind on any credit card payments after closing
- You shall not allow others to run credit checks
- You shall not co-sign a loan for anyone
1. If you’re about to close on a house, it’s probably not the best time to get a new car, boat, personal aircraft or other expensive toys. Even furniture or appliances — basically anything you might pay for in installments — is best to delay until after your mortgage is finalized.
Depending on your credit score and history, these transactions can lower your score, which can impact the interest rate and loan amount you could receive. This could result in a higher interest rate for the next 15 or 30 years, or even having to come up with a larger down payment.
2. Another major mistake is changing jobs. This is because mortgage lenders examine your employment history to determine if there’s a history of steady jobs and income. Providing additional documentation on employment to a lender can delay the closing.
3. This one is pretty self-explanatory, but dipping into your money set aside for the downpayment is a big no-no.
4. Typically when a large amount of money is deposited into your account, it’s time for celebration — except while you’re waiting for a mortgage loan approval. In this scenario, unless you can prove the deposit is legitimate, those additional funds can lead to your mortgage loan being denied.
5. Just like all things in life, not telling the whole truth just causes more problems than it solves. And withholding the truth during the largest single transaction of your life will only cause issues with your bank and chances of closing on your home.
6. Wait until after you have moved in to start buying furniture for the place. Not only is this better for figuring out measurements and where to put things, but this is also better for closing on your mortgage. You should not start financing any new purchase during this time.
7. It’s not just big purchases that can alter your credit score. Opening a new credit card or closing an existing one, or taking out a personal loan, can affect your standing, too.
8. This one is pretty straightforward. Maintain regular on-time payments for all your bills.
9. Running hard credit checks through third parties can lower your credit score. Let your mortgage broker run these checks for you because that data is preserved and transferred to the lender the broker sends your mortgage to.
10. Buying one house is already the single largest purchase you will ever make. Trying to do this while co-signing on another large purchase is a bad idea. Most people can not afford to pay two mortgages at once, and if you fall behind on your co-signed payments, it will negatively affect your credit score.
Do you have any more questions about the mortgage closing process? Are you wondering what to do next? Contact Chris Marriner! He would be happy to answer any of your questions and help walk you through the rest of the process. It’s important that you feel confident and informed as you make this major decision for your family, and we want to be by your side every step of the way. Thanks for reading our blog post on mistakes to avoid when closing on a mortgage – now let’s work together to get you a new home!