About Focus Homes Industry News

What NOT to do Before Closing on Your New Home

Ensure your loan is closed on time with these tips from our preferred lender, RMC Home Mortgage

One of the most exciting steps of the home buying process is getting pre-qualified with a mortgage lender. It’s important to keep in mind that everything you do from now until your final loan approval at closing is detrimental. Certain financial changes just before or after you qualify can trigger red flags to lenders in regards to the stability of your loan.

Stay out of hidden traps that could upset the course of your closing with these crucial DON’TS:

1. Don’t Change Jobs

Frequent switches in jobs trigger inconsistency and unstable lifestyles. Mortgage companies correlate strong job histories with stable income; it lets them know you’re responsible to make loan payments on time. Further, changing jobs may result in closing delays or a lower final loan approval rate as they typically require further verification.

2. Don’t Close Credit Cards

Closing credit cards have the opposite effect on credit than you may be aware of. You can make payments continually to tighten up your records, but make sure to keep your lines open – even if you don’t owe anything.

3. Don’t Open New Lines of Credit

Opening new lines of credit during this time can lower your credit and signal a higher risk to your mortgage lender. Mortgage lenders are required to update your credit report a few days before closing, and any new inquiries will require additional verification of new accounts, causing closing delays, or a lower final loan approval rate.

4. Don’t Make Large Purchases on Credit

Making large purchases using existing credit lines can negatively affect your debt to income ratio and your risk credibility with mortgage lenders. We understand that a new home can be very exciting, but be smart about spending on credit after getting pre-approved. We recommend waiting until after closing to purchase new furniture, appliances, or other large assets such as a car.

5. Don’t Switch Banks

When trying to qualify for a home loan, having a consistent and stable banking history is a positive sign. Avoid switching banks or depositing large quantities into your bank account, as it can trigger a red flag to your mortgage lender.

6. Don’t Co-Sign on a Loan

Although as a co-signer you’re not responsible for making payments, it will still show up as a debt on your credit reports. This can increase your debt to income ratio and put you at a higher risk.

RMC Home Mortgage encourages a successful home buying experience for every customer and will help guide you through the loan process all the way to homeownership.

Gain more insight from our preferred lender.