Maybe you are just starting out or maybe you are already approved, the contract is signed, and the closing date is set. But before you start celebrating, be careful—any major financial changes could put your mortgage at risk. Lenders monitor your credit until the final paperwork is signed, so avoid these common mistakes to ensure a smooth closing process.
1. Don’t Take on New Debt
Avoid new credit cards, loans, or big purchases like furniture or a car. Even a small increase in debt could alter your debt-to-income ratio and risk your approval. Wait until after closing to make major financial moves.
2. Don’t Change Jobs
Lenders look for stability. A job change—especially to contractor or commission-based work—can delay or even cancel your mortgage approval. If a job switch is unavoidable, consult your lender first.
3. Don’t Make Late Payments
A single late payment on a mortgage, car loan, or credit card can lower your credit score and potentially disqualify you from your loan. Keep payments on time to protect your financial standing.
4. Don’t Close Credit Accounts
Closing credit accounts reduces your available credit and raises your credit utilization ratio, which can hurt your credit score. Keep accounts open and balances low until after closing.
5. Don’t Make Large Cash Deposits or Transfers
Unexplained deposits or large account transfers can delay approval. Lenders require a clear paper trail for all funds used in the transaction. If you receive gift money, notify your lender and be ready to provide documentation.
Stay on Track for a Smooth Closing
The time between contract signing and closing is critical. Keep your finances steady, avoid new debt, and stay in close communication with your mortgage advisor. If you have any questions, I’m here to help!
Judi