The time between getting your offer accepted and actually closing on your home can be a bit nerve racking. First, there’s waiting for critical milestones such as a sufficient appraisal and receiving mortgage approval. You’re probably also starting to pack and prepare for the big move. There’s a lot to coordinate and a lot of it depends on actually being able to close. To avoid a stalled or cancelled closing, you will need to do your part. Here are 3 mistakes to avoid before closing on a home.
1 – Quitting Your Job
Some buyers are under the mistaken impression that you only need a job for the mortgage pre-approval. You actually need to be employed through closing. The mortgage company is lending you money to purchase a home based on that employment status. In fact, they will re-verify employment just before the closing. If you are unemployed or change jobs, this could jeopardize your closing. At the very least, it will require your loan to be resubmitted to underwriter for review, which takes time and could delay closing. Thus, it is best to wait until after closing before making any job changes.
2 – Buying Cars and Other Expensive Items
Another factor that lenders look at closely are your income and expenses. It is the basis of your pre-approval and your eventual full approval. One of the most common and biggest mistakes to avoid before a home closing is buying a car or charging a lot on credit cards. Additional debt can throw off your debt to income ratios. In some cases, you may no longer qualify for the mortgage!
If you plan to purchase a new car, buy new furniture for your home, schedule an expensive vacation, etc., it’s best to wait until after your closing. Not only can added expenses impact your ratios but it can also reduce your credit score. Both are essential to obtaining a mortgage and closing on your home.
3 – Not Gaining Access to Needed Funds
If the money for your down payment and closings costs are coming from a specific account, be sure to take steps to gain access to those funds in time for closing. For instance, if you are accessing funds in your 401(k) account, it can take a week or more to complete the process. If you have a virtual savings account, it may take a few days for funds to transfer to your checking account. Don’t wait until the last minute to submit paperwork and transfer funds. That could delay the closing, which could have a domino effect and cause other issues.
Other Mistakes to Avoid Before Closing on a Home
Working with a good lender is the best way to avoid closing issues. Your lender will provide you with a list of other mistakes to avoid before closing on a home. If you do not yet have a lender or would like a quote from an additional lender, we are happy to refer one to you. Please contact us for assistance.
