11 Things You Should Never Do Before Closing on a Home
Buying a home is exciting, but your mortgage approval isn’t necessarily finished just because you’re under contract. Changes to your credit, income, debt, or bank accounts before closing can create delays, change your loan approval, or even put the closing at risk.
Here are 11 things I tell homebuyers to avoid before closing on their home.
Prefer to Watch Instead? Watch my quick breakdown of the 11 things homebuyers should avoid before closing.
1. Don’t Change Jobs Before Closing
Changing jobs doesn’t automatically kill a mortgage, but it can create additional documentation or change the income we can use to qualify you. If you’re considering a job change before closing, talk with your loan officer first.
2. Don’t Max Out Your Credit Cards
Your credit card balances can affect both your credit score and your debt-to-income ratio. A large increase in your balances before closing could change your mortgage qualification.
Try to keep your credit usage consistent while your loan is in process.
3. Don’t Spend Your Down Payment Savings
The money you’ve set aside may be needed for your down payment, closing costs, reserves, or other expenses associated with the transaction.
Before making a large purchase, make sure you know exactly how much cash you’ll need to complete your closing.
4. Don’t Buy Furniture Before Closing
That new house may need a new couch, refrigerator, or bedroom set, but wait until you have the keys.
Financing furniture can create a new monthly payment and change your debt-to-income ratio. Even paying cash could reduce funds needed for closing or required reserves.
5. Don’t Open New Lines of Credit
Avoid applying for new credit cards, auto loans, personal loans, or other financing without talking with your loan officer.
New credit inquiries and new monthly obligations can affect your credit profile and mortgage approval.
6. Don’t Make Large Cash Deposits
Mortgage lenders generally need to document the source of certain funds used in the transaction.
Large or unusual deposits may require additional documentation. Cash can be particularly difficult to document because there may not be a clear paper trail.
If you’re expecting a large deposit, tell your loan officer before moving the money.
7. Don’t Change Bank Accounts
Opening, closing, or moving money between accounts isn’t necessarily prohibited, but it can create additional documentation.
Keeping your finances consistent during the mortgage process can make verifying your assets much easier.
If you need to move money, ask your loan officer how to document the transfer properly.
8. Don’t Co-Sign for Anyone
Co-signing for someone else’s car, credit card, apartment, or loan can create a financial obligation for you.
Even when someone else intends to make the payments, the new debt may affect your mortgage qualification.
Wait until after your home purchase is complete before considering a new co-signed obligation.
9. Don’t Make Large Cash Purchases
Buying something with cash doesn’t create a new monthly debt, but it can reduce the assets available for your home purchase.
Your lender may need to verify enough funds for your down payment, closing costs, and potentially reserves.
Keep your available cash stable until you know exactly what will be required at closing.
10. Don’t Buy a Car Before Closing
This is one of the biggest mistakes a homebuyer can make during the mortgage process.
A new auto loan or lease can add a significant monthly payment to your debt-to-income ratio and potentially reduce your home-buying power.
If your car situation absolutely cannot wait, talk with your loan officer before signing anything.
11. Don’t Ignore Your Loan Officer’s Emails
Mortgage approvals involve deadlines, updated documents, and sometimes additional questions from underwriting.
Responding quickly can help keep your loan moving and reduce the chance of unnecessary delays.
If your loan officer asks for something that doesn’t make sense, ask why. There is usually a specific underwriting or documentation requirement behind the request.
The Simple Rule Before Closing
Until you have signed your final documents and the transaction is complete, avoid making significant changes to your financial picture without checking with your loan officer first.
That includes your income, employment, credit, debts, bank accounts, and available cash.
A five-minute conversation before making a financial move can be much easier than trying to fix an unexpected mortgage problem afterward.
Have a Mortgage Question?
Every buyer’s situation is different. If you’re unsure whether a financial move could affect your mortgage approval, get the answer before making the move.
Dan Martinez
Mortgage Broker | Atlantic Home Mortgage
NMLS #2700942
D.Mart Home Lending powered by Atlantic Home Mortgage
Atlantic Home Mortgage, LLC | NMLS #1844873
Licensed in Georgia, Texas, North Carolina, and Florida
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