When you're ready to close on your home, you probably feel as though you're near the finish line. Although this is true, you'll need to be careful not to make a mistake that could delay closing or put your loan approval in jeopardy.
Our real estate agents warn against doing these 5 things during the closing process.
- Make a Big-Ticket Purchase
When you're buying a home, you may have your eye on some large purchases, such as new furnishings, appliances, or other items for your new dwelling. You might be tempted by a furniture store line of credit or think it won't hurt to add some new purchases on your credit card. After all, your mortgage has already been approved, and you're about to close on your home, so what harm could it do? As it turns out, your credit is still being monitored. Any large purchases could change the ratio of your income to debt, putting your mortgage loan in danger or causing you to pay a higher home loan interest rate for years to come.
- Change Jobs
Changing jobs during the closing process can complicate matters greatly. Your mortgage lender has agreed to your loan based on your employment history as well as your current job and income. If you have a new job, this may cause issues since your lender may call the employer you originally listed on your loan application in order to re-confirm your employment. In addition, if you take a lower-paying job, your lender may not be able to offer you the same loan amount.
- Open or Close a Line of Credit
Your credit report and score play a large part in your ability to get a mortgage as well as in determining what interest rate your pay. Until the closing process is completed, you should keep your credit stable by not opening or closing new lines of credit. Opening a new line can make a lender think you could easily max out your card and have trouble paying your mortgage. And although closing an existing line of credit may sound like a good financial move, it can cause trouble with your mortgage loan since it removes that credit history and affects your length of credit. This can negatively impact your credit score.
- Make a Large Deposit
If your lender sees a large amount of money deposited into your banking account without an obvious explanation (such as a tax refund), this can be a cause for concern. That's because your lender may view it as a loan that has to be repaid and require proof – through a bill of sale, pay stub or letter from a person who gifted you the money – that this isn't the case.
- Check your Credit Report
Leave your credit report alone as you prepare to close on your home. Even if you find a mistake in it, don't try to correct it before you close on your home. Disputing an error can cause another inquiry and report to be generated, which could delay your closing.
Contact us today at Latter & Blum if you're interested in looking at Baton Rouge homes for sale. We can guide you through the entire process, from pre-approval to closing, so it proceeds as smoothly as possible.