It might seem like common sense, but you’d be surprised how often people do things that seriously derail their mortgage applications and losing homes they love. Nobody wants to see that happen, including us. Here are the 6 things that you should never do after you apply for a mortgage—any of them could delay closing or even prevent you from closing at all.
1. Don’t Apply for New Credit
Don’t apply for new credit. This might seem obvious, but you’d be surprised how many people finance a new TV or a new bedroom set for their new house . . . right before they close on that house.
Don’t finance or lease a car, furniture, electronics, or anything else. Don’t apply for new credit cards, new store cards, or student loans. In short, don’t finance anything or apply for any credit at all. And don’t put any major purchases on your credit cards.
Any of these things can affect your debt-to-income ratio and make you ineligible for the loan you’ve applied for.
2. Don’t Make Large Deposits to Your Bank Account
Don’t make any large deposits to any of your bank accounts. Your down payment needs to be seasoned (in your account for 60 days) before closing. Any non-payroll deposits you make during the time between application and closing need to be fully explained and verified.
3. Don’t Make Any Major Life Changes
Don’t make any changes to your employment during this time. Don’t drop your hours at work, and don’t quit your job. Don’t change from employee to contractor or from salary to commission-based pay. These things are huge red flags during the underwriting process.
This is because banks want stability when they give you a mortgage. They want to be pretty sure that you’ll have the resources to pay back the loan.
4. Don’t Have Hard Inquiries Made on Your Credit
Don’t allow anybody to make hard inquiries on your credit, which will lower your score. The only exception to this is that you can allow insurers to check your credit for homeowner’s insurance (which you will need to close) and also when you call about utilities for your new home.
5. Don’t Raise Any Red Flags for Underwriters
Don’t raise any red flags for our underwriters. Changing your name or address can cause us problems. So can co-signing on another person’s loan.
Additionally, continue to make all of your bill payments on time. Not doing so could damage your credit substantially. In fact, a late payment can make you ineligible for a mortgage for at least a year.
6. Don’t Spend Your Down Payment/Closing Cost Funds
This might be the most important of all. DO NOT spend any of the money you have set aside for down payment and closing cost funds. You’re going to need it very soon.
I hope this helps you think about what you can and can’t do during the time between your mortgage application and closing. If you follow these important rules, you’ll be ready to close on your new home without a hitch.