Avoid These Mistakes Prior to Closing on Your New Home
Don't compromise your mortgage approval status and derail your home purchase by making these mistakes before closing.
What are the worst things a buyer can do to compromise their mortgage approval status before closing on a house? Five main actions could quickly derail your North Carolina home purchase. Buyers must remember that their credit is monitored right up to the day they sign the contract. It is important to practice some self-control when it comes to credit, debt, and purchases and to keep the lines of communication open with your lender until you walk away from the closing table with the keys to your new home.
Lenders like stability, and if you change jobs before closing, it may raise red flags and cause you to lose your loan. While moving to a new job with a higher salary may not cause you to lose the mortgage, it will most likely cause a delay and push the closing back to a later date which has the potential to derail the home sale altogether. If a change in job positions within your current company is unavoidable, but your salary stays the same, then your lender will probably won’t have a problem as long as you keep them informed during the process.
Store Line of Credit
It is easy as a buyer to get excited about your new home purchase and begin to think about how you are going to furnish your new space. However, buying $3,000 worth of furniture on a store line of credit, even if you aren’t required to make payments yet, is a big mistake. The problem is that your debt-to-income ratio will be thrown off because your mortgage lender assumes you have to start making monthly payments immediately. If this pushes your debt-to-income ratio out of your lender’s preferred range, then you can say goodbye to your home loan.
Taking on More Debt
A crazy as it may sound, buyers have been known to take out a loan on a new car days before they are supposed to close on their new home. Hopefully, this is not something you would even consider. Whenever buyers take on additional debt, no matter how big or small, that wasn’t there when they applied for their loan, the lender will question whether those buyers will be able to pay all their bills and afford a new mortgage.
Additional Credit Inquiries
When you apply for credit cards, creditors will pull your credit record, which negatively affects your overall credit score. Your mortgage lender does not like to see any credit inquiries while your home loan is awaiting final approval. No matter how tempting it is to sign up for cash back rewards, mileage points or a low introductory interest rate, a new credit card is not worth losing your mortgage approval.
Receiving Large Deposits
Some buyers receive monetary gifts from family members to help with the down payment on their new home. If you are a first-time home buyer, you may be tapping into your IRA for the down payment needed to buy a new house in North Carolina. This could become an issue with your mortgage approval if you do not communicate to your lender that you are expecting large deposits. You will also need to explain where this money is coming from and document that it is not a loan.
One of the worst possible feelings a buyer can experience is to have their mortgage approval fall through just days before closing on a new home. If you have questions about whether or not something could harm your chances of receiving financing for your home purchase, speak with your lender. Have any other questions or concerns when it comes to buying a home in North Carolina? Contact us today, and we’ll be glad to help.