You've found your dream home, your offer is accepted and your closing date is 20 days away. We know your mind is on furnishing your house and buying supplies. And, you're probably a little overwhelmed with all that goes into moving. Don't jeopardize your chance at a successful closing by making one of these errors.
Here's what NOT to do before closing on your new home:
Change jobs. Don't make any changes in your employment if at all possible. Obviously, quitting a job will affect your ratios and won't support the mortgage payments. But, believe it or not, changing jobs can impact your financing as well.
Also, going from hourly to salaried or losing over time will force the bank to re-look at your financial situation and could prevent your financing period. A lender doesn't want to see you go from a job to a totally unrelated new job. If you are completely changing careers, your track record will not show up in the bank.
Increase debts. You're mortgage application was just approved, you laid out all of your credit obligations, passed the crucial debt-to-income ratio, and you're feeling upbeat about the prospect of moving to a new home! The first thing you're thinking about is new furniture and decorations, but don't do it!
Virtually all banks and mortgage companies use some form of commercially available program to keep tabs on credit files between the date of your loan application to your settlement. So you visit a couple of stores and take up their offers for low interest-rate credit lines, then apply for what could come to as much as $14,000 worth of new debt, all to be paid off monthly.
This new credit inquiry will trigger an alert to your lender or mortgage broker that you are pursuing new credit accounts. That debt could knock your debt-to-income ratio over the cliff.
Apply for new credit. While it's exciting to buy a new home, don't rush off to open a furniture credit account or a Lowe's credit card. Even if you don't use the line of credit, it still affects your credit score.
Credit reporting agencies look at available balances as part of the algorithm to determine your score. And, the mortgage company will be updating your credit score throughout the process as well as pulling your credit score within 24 hours of your scheduled closing to make sure there are no significant changes.
Move money without a paper trail. Another big no-no is to not make large deposits or withdrawals from your bank accounts or other assets. If lenders suddenly see unsourced money coming in or going out, they might think you're getting a new load which would impact your ratios.
If you get a bonus from your employer or an IRS tax refund, lenders won't have an issue. But, if your friend wires you some money or you receive business income to your personal account, a lender will demand proof to verify the deposit isn't a disguised loan. Expect a lender to ask for a bill of sale, a canceled check, or a pay stub.
Skip a payment or make a late payment for a bill. Keep paying your bills on time. Payment history is one of the most important factors in your credit score, and late payments on credit accounts - 30 days or more - can hurt.
It will hurt your FICO score and has the great potential of even making you ineligible for a loan with most lenders for at least a year.
Spend your savings. Depending on the type of mortgage loan and the lender you're using, you may be required to have additional cash reserves in the bank. This is money above and beyond your down payment and closing costs. Lenders today are stricter about cash reserves than they were in the past and a higher loan amount generally means additional requirements for cash reserves.
It's not uncommon to see certain costs go up 10% from the estimated closing amount on closing day. This is another reason to protect your savings between now and the time you close on the loan.
Buy big-ticket items. You may make plenty of money and believe you can handle the payments of a new car and a mortgage but don't forget a large purchase will change your credit profile.
Even if you can afford it, any significant purchase will show on your credit and delay your financing as ratios and your credit score change. We highly suggest you wait until after you close to make any new big-ticket items.
Lenders will continue to check your credit, income, and job stability up to just before closing to see if anything has changed that may impact your qualifying.
If you're considering buying a house or investment property in the Florida real estate market, let Paradisum Group EXP help you make a sound decision. Call 850-320-8385 or Contact Us Today!
