You got the pre-approval, found a home, and had your offer accepted. All you need to do now is sit back and wait for closing, right? Well not exactly, when it comes to real estate it’s not over until it’s over.
Not to scare you because the odds are good that nothing major will go wrong, but that doesn’t mean things can’t go wrong. A financial misstep now could change your mortgage terms and interest rate, or even get you denied altogether, even if you’ve got a closing date on the books. To make sure that doesn’t happen to you, avoid these major money moves.
Moving Money Around
If you have been storing up cash reserves, DO NOT move that money out of savings and into stocks while you wait to close. Moving money around can wreak havoc on your loan approval. You would think that isn’t a big deal, but mortgage advisors are counting how much money you have going into closing.
With saving, mortgage advisors, count that as 100%, but with stocks, we only use 70% of the value because stock prices can change. So, if you have $100,000 in savings and you move that into stocks, suddenly you only have $70,000 from an underwriter’s perspective.
Taking a Leave of Absence from Work
Lenders are relying on your being willing and able to work after they approve your loan. It is the only way to prove you will make those monthly payments. We know that things happen, and sometimes you have to take a leave of absence. But don’t risk it unless it’s completely necessary, or unless you are prepared for your mortgage to get delayed or denied.
Applying For New Lines of Credit
If you apply for a new credit card or request a credit limit increase a few months before closing, it probably won’t hurt too much. But don’t let the credit inquiries add up.
Rather than trying to figure out how many credit inquiries is too many or how much new credit you can take on without killing your mortgage, do yourself a big favor and leave the applications alone until you’re through closing.
Going On Shopping Sprees
Buying a new home is exciting, and you are probably itching for new furniture, new appliances, maybe even a new car to put in the garage. However, if you get too carried away and aren’t careful with your financing, you can follow that sweet showing spree right back to your old house or apartment.
Lenders often run credit reports within hours of the scheduled closing, running up new large debt is an awful idea. It can change debt ratios, change your interest rate ( which may also kill your mortgage approval), and even lead to a lender deciding you have too much debt and not worth the risk anymore.
Taking a New Job- Even A Better-Paying One
No lender is going to be over the moon if you get a new job halfway through the home-buying process. It disrupts an already tedious paperwork process.
Some moves are more “ok” than others, like getting a promotion within your company or even making a lateral move to another. Lenders are less “ok” with switching fields.
Remember that lenders want to feel good that you can repay the loan and by making sudden changes to your income and debt are not a good idea.
