Just Say "No" 10 Things Not to Do When You're On Your Way to Closing

So, you’ve made an offer on a new home; it’s been accepted; and, you’ve been pre-approved for your mortgage. Congratulations! But, don’t necessarily start the celebration just yet. In that waiting period between making an offer on a new home and going to closing, there are some moves that can derail your entire process… even when you’ve received that coveted mortgage pre-approval.

While most of the saving and credit-building moves that you’ve put into place have likely paid off at this point, your mortgage lender will be completing a final check of your credit once more before handing over those new home keys.  

What can you do to make sure that your mortgage approval goes all the way to close? Better yet, we’ve outlined 10 things that you definitely should NOT do during that waiting period:

When it comes to your credit…

1. Do not apply for any new credit

Although it can be tempting, do not go to the hardware store, furniture store or any other store and sign up for a credit card. If you do, there will be a hard inquiry on your credit that will knock a few points off of your credit score. Plus, you’ll have more credit to spend, which can detract from money that can be put toward your loan.

2. Do not go on a credit-spending spree

Just like you don’t want to open any new credit cards, you also don’t want to run up the credit on your current cards. When you spend your credit, you increase your debt-to-income ratio. Your lender will be taking a hard look at that ratio and if it passes a certain percentage, you may no longer qualify for your loan!

3. Do not co-sign on a loan: Some may argue that this is never a good idea, but it absolutely is not a good idea when you’re preparing to close on a new home. Co-signing on a loan means that you are partially responsible for a new debt, which certainly lowers your debt-to-income ratio.

4. Do not miss a payment (and don’t even be late)

If you’ve done your due diligence in paying your credit card bills while you’ve been saving for your house, don’t stop now. Letting even one payment slip can leave a black mark on your credit score.

5. Do not close credit accounts

Yes, it may be a good idea to pay down or pay off your credit cards when you’re preparing to buy a home. But, don’t go as far as closing those cards… just yet. Believe it or not, it actually looks better when you have available credit to spend than when you have less credit in general.

When it comes to your bank accounts…

6. Do not move your money around

While it won’t necessarily hurt you to move your money around, you might need to show a mortgage lender why you did. Before you go to close, you will be required to submit your most recent bank statements. When a lender sees major money moves during the closing process, they could want documentation as to why.

7. Do not make any large purchases

When you’re buying a new home, it can be easy to want to make some other large purchases. “My, a new car or hot tub would be a nice addition to my new home.” However, it is wise to hold off on large purchases during the closing process, even when you’ve got the cash to spend. Any purchase can affect your debt-to-income ratio.

8. Do not spend your savings: You’ve probably spent a lot of time working on building up your savings for your new home. When it gets close to closing time, it’s easy to start thinking about all the new things you want for your home. Thinking is OK, but don’t start buying all of those things before you move. It may be tempting to touch all that money you’ve been saving, but remember that you will need hand money at closing to complete settlement.

When it comes to your personal life…  

9. Do not change jobs

Often times, a new job may mean a promotion or more future potential. But, when it comes to mortgage approval and closing on a new home, a new job could mean a possible delay. Mortgage lenders need to verify current employment at the time of closing, which requires your most recent pay stubs. Depending on when you switch jobs, you may have to wait to provide your lender with your most recent information.

10. Do not lie about your financial situation

OK, this tip seems like a no-brainer, but intentionally or unintentionally leaving out the finer details of your financial history is always a bad idea. If you’ve had credit problems in the past, tell your mortgage lender about them and explain why they are in the past. You also need to disclose every debt you have to your lender. Forgetting about that emergency credit card is a bad move. When it comes to mortgage approval, non-disclosure is a major “no-no.”

Now that you know what not to do when you’re on your way to closing on a new home, what can you do? Wait patiently for closing day to come!

This post is sponsored by PA Preferred Mortgage:

Pennsylvania Preferred Mortgage is a full service mortgage banker and is a member of the Prosperity Home Mortgage, LLC family. Specializing in residential and refinance loans, Pennsylvania Preferred Mortgage offers a wide range of mortgage products, including fixed and adjustable rate mortgages, jumbo loans, Federal Housing Administration (FHA) and Veterans Affairs (VA) loans, and renovation financing. Learn more at www.papreferredmortgage.com.