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Closing your mortgage loan: 10 things NOT to do

By Shelley Sines

October 2016

So you’ve been pre-approved for your first mortgage loan, and you’ve found the perfect starter home. Your offer was accepted, the home inspection passed and your loan officer locked you in at a favorable rate. You likely think you’ve all but sealed the deal.

You won’t officially be a homeowner for another 30 days, give or take, so hold your horses. Because guess what? Your lender will check your credit again just before your closing date, prior to granting you the funds. Your lender might also need additional information from you while processing your loan application. That means that keeping your finances stable and being readily available to answer any questions over that 30-day time period is pretty important.

Here are 10 things you should avoid doing before closing your mortgage loan.

Do not:
  1. Buy a big-ticket item: a car, a boat, an expensive piece of furniture
  2. Quit or switch your job
  3. Open or close any lines of credit
  4. Pay bills late
  5. Ignore questions from your lender or broker
  6. Let someone run a credit check on you
  7. Make large deposits to your accounts outside of your paycheck
  8. Cosign a loan with anyone
  9. Change bank accounts
  10. Take out any payday loans
Depending on your personal situation, you might want to take some time to get comfortable with your new mortgage payment — and after that, it’s probably okay to splurge on that new kitchen table, go on a long vacation or open a new line of credit. But doing so before you close could potentially put getting your home in jeopardy.
 
Learn more about what not to do before closing.
 
Savannah Ward

Great information

Terry Gayle Swon

Thank Ok!

Amy

Very helpful indeed!

David Savino

Thank you for the information.

Luz A Delgado

Thank you i Learn a lot today :)

ullu

Why does everyone in the industry is interested in scaring buyers? This is nothing but a simple financial transaction, with a loan. I did many of these things on the list. In fact co-incidentally I had an unusually large number of big sums of money transfers from/within my accounts. Changed jobs because a good opportunity came along. Life does not stop just because one is approved for a mortgage and the deal is not closed yet.

Robin

In the mortgage industry for 20 + years here... Doing these things can do a few things: Jepordize your buying power if you're tight on your debt to income ratio Delay your loan closing Require multiple documentation requests If you are changing job fields completely, it could risk your loan approval. The article is guidelines and suggestions. Every loan application is unique

Telida

I was just approved by underwriting. I don't close til oct. does this apply I have already been approved. So are they gonna take the loan back

Liz - Readynest Editor

Telida, it's always a good idea to maintain the status quo and avoid big purchases or other financial changes between loan approval and closing. If you have any concerns, your lender should be able to address them. Best of luck!

Tammy Bailey

Information was very helpful

Cora Malone

Thanks!

Jmgilchrist

Great info

Bing

I’ve already got my bank offer letter signed and returned to the bank. Because of covid, I am now receiving jobkeeper subsidy, will this affect the settlement?

Liz - Readynest editor

Bing, you should notify your lender of any changes to your income. That's the best way to know if it will have any impact on your loan closing.

Kyle

I have just few thousands remaining to complete my 20% down payment. Can I get a personal loan to complete the 20% to avoid PMI stuff before the closing date.

Liz - Readynest editor

Kyle, most lenders will not allow you to use a personal loan for down payment funds (you'll need to check with your lender to be sure). Remember that a personal loan will add to your monthly expenses, just like PMI. Although private mortgage insurance will add to your monthly payment, it's important to note that it's not permanent - you'll be able to cancel PMI once you reach a certain amount of equity in the home. See readynest.com/cancel-mi for more.

Cam

What is considered a large cash deposit in your account?

Liz - Readynest editor

Cam, there is no exact dollar amount - a large cash deposit is usually defined as "a single deposit that exceeds 50% of the total monthly qualifying income for the loan."

John

What amount of money would be considered as a big ticket item. I got alittle spending happy since things are opening back up, i took out in withdraws about .15% of my savings for odds and ends.

Liz - Readynest editor

John, there's no specific dollar amount, but you should avoid buying items on credit that will add to your overall monthly debt. Paying for items in cash won't generally contribute to your monthly debt - but taking too much money out of your savings or checking accounts could still affect your reserves (the amount of cash on hand you will have after the mortgage transaction). If you have any concerns about your specific situation, talk to your lender!

Brian Gates

Great information.

Peter J Rodriguez

I'm supposed to be getting a large lump sum from a retention bonus I signed at work. Will that be an issue?

Anne M Bunai

Lots of helpful information. Thank you

Maria

Can I use my credit card for furniture right after closing? (Same day)

Eddie

My closing date is in 2 days but I just received a collection from a hospital bill that I forgot I paid the bill but will that affect my loan?

Liz - Readynest editor

Eddie, the answer to your question depends on when the medical bill went into collection and when the collection agency reported it to the credit bureaus, among other factors. The best advice I can give is to be responsive to your lender if they reach out with questions or requests for additional documentation.

John

I am trying to let my money in the stock market as long as I can. When I got pre-approval they told me it was fine since it was tracable. Am I still safe? We got under contract and sent the earnest deposit yesterday. How soon does the lender need to see the full down payment in my account?

Edward

I closed late Friday, loan won’t be funded til Monday. I’m afraid I’ll appear as an authorized user on my brothers credit card Monday. Would this effect me? Or did the credit report I was charged for a couple of days before closing the final credit overview?

Ashley

Closing on new build home and husband just lost his job. Is it possible to put someone else on the mortgage with me, such as a family member instead?

Liz - Readynest Editor

That's a question for your lender, Ashley! They may have specific guidelines for having a non-occupant co-borrower on the loan. And of course, your relative would need to qualify as a borrower. Keep in mind that adding a new borrower will likely delay your closing.

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Shelley Sines has been writing for MGIC since she graduated from college in 2007. Currently raising a sweet little family with her husband in the suburbs of Milwaukee. Happiest when cooking or gardening. Competitive Scrabble player. Enthusiastic about road trips, wine, good TV.
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