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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.

Andrew

I opened a new, small credit line in error 3 days ago. Upon realizing my mistake, I closed the credit account 1 day later. My escrow is due to close in 4 days. Will this cause issues with the closing?

Liz - Readynest Editor

Andrew, your credit score could take a temporary dip depending on how and when your opening and then closing a new line of credit is reported to the credit agencies. I couldn't say whether that will affect your closing - to know for sure, you should check with your lender.

Natasha

I was approved for a loan went to closing and the title company found an issue with the paperwork at closing. Closing has been delayed a month with much back and forth. Now the file is cleared by the title company again and we’re looking to schedule another closing. What can I expect? I am a nervous reck. Will I have to go through underwriting again? I’m so scared I don’t know what’s happening. Any insight would help.

Liz - Readynest Editor

That sounds stressful, Natasha! If you're worried about your rescheduled closing, I would talk to your lender and/or your real estate agent about making sure everything is in order and up-to-date. You should not have to go through underwriting again, although your lender will pull your credit just before closing to make sure nothing has changed.

Natasha

Thank you. Closing is tomorrow. Fingers crossed. Lender did pull my credit again they also asked for bank statements and updated paystubs. I haven’t heard anything back so I’m praying everything is ok and we can close tomorrow with no hiccups.

Lance

I had 3 payday loans that were deposited into my checking. I immediately called each provider and reversed the amounts back. Each lender could not inform who/where they were submitted from. I have each receipt showing paid. My bank recommended closing our account. Explained to them about the closing date on 9/28 for our home. Can this affect my approval odds? Our down payment was already completed through Ernest money. Please advise

Liz - Readynest Editor

That sounds super stressful, Lance! The only advice I can give is to explain everything to your mortgage lender and provide any documentation they request promptly. Best of luck!

John

Wish I had seen this thread. Buying a new construction home and closing in less than 30days. Stupidly opened a line of credit today for 1500 worth or furniture (50 month interest free). Not sure if I should panic.

Liz - Readynest Editor

Don't panic, John! But I would reach out to your lender and ask them if they foresee any issues and whether they need any additional paperwork from you.

Alicia Olivera

I withdrew cash from my 401k from my old job so i can have that extra money that i will need for closing. Will this be an issue when they see the big chunk of money in my savings? I have eveything to prove it comes from my 401k, i just dont want there to be an issues when they pull my info one last time as we get closer to closing.

Liz - Readynest Editor

Alicia, as long as it's clear where that money came from, that large deposit shouldn't affect your mortgage - but I would notify your lender now and ask if they need any additional paperwork from you, just to be sure.

Dee

We are in escrow waiting on our closing disclosures. My husband had been saving money to help his mom with something, and sent her 3,400.00. Will this affect my loan?

Liz - Readynest Editor

As long as you have enough cash on hand to pay what you owe at closing, your husband's gift to his mom shouldn't affect your loan! But it can't hurt to check with your lender - better to avoid any surprises.

Yvette

We own our own business and have been per-approved for our mortgage and have answered all questions to lender. Plus we have a 20% down payment and closing funds. It has been 46 days and now our Realitor has asked for 7-10 day extension with the homeowner what is taking so long . I don’t want to loss out on this home the mortgage company is dragging his feet.

Liz - Readynest Editor

That sounds frustrating, Yvette! There's not much advice I can give you in this situation - just continue to ask your real estate agent for updates and ask them to explain the delay. Best of luck!

Jeff

Wish I saw this before. I and my wife is about to close in 3 days. Stupid am I, sent my notice of resignation to my manager last week. My wife already resigned from her work, and lender said this would not be a problem just send the offer letter from her new job. Do you think I should let my lender know that I resigned? I’m really nervous now that we might lose the house:(

Liz - Readynest Editor

Jeff, as nerve-wracking as it is, if you used your income to qualify for the loan as well as your wife's income, I would call your lender to discuss. If you are moving to a new position in your field at a salary equal to or greater than your previous position, it probably won't be an issue, but it's better to get ahead of any potential hiccups.

Rick

Well I got a new car and my wife to after we got approved for a 100% loan and I got two new lines of credit open and now I have a debt on my new credit card will that affect us

Liz - Readynest Editor

Rick, it's best to notify your mortgage lender of these changes to avoid surprises - they will let you know if there will be any impact on your home loan.

Wisebuy Investment Group

Thank you for sharing useful information with us. Keep sharing...

Diana

I totally wasn’t thinking and used my credit card for Christmas shopping on just one of my credit cards. My balance increased about $1500, I already made a payment of $500 but it won’t see the payment affect my credit score until next month. I was just told that the mortgage process is in its final stages and will do another credit check before giving a closing date. I’m panicking because of everything I’m reading. Will this delay the closing. Any suggestions?

Liz - Readynest Editor

Diana, don't panic! Call your lender and ask if your recent credit history will have any impact on on your loan or closing date. It's better to get ahead of any possible hiccups. Good luck!

J Green

My daughter added another cell phone to my account without my permission and I'll be closing in 30 days will that affect me closing

Liz - Readynest Editor

J, if your daughter added a line to an existing account, your carrier probably didn't check your credit to add the line, so it probably won't be an issue - but I couldn't say for sure! If you're concerned, you should check with your lender.

Marion

HELP!!! Pre-approved at 2.65 and less than three weeks from closing. Got charged an "annual fee" last month on a credit card and it showed as late on my credit report this month. Haven't used card in over a year and had zero balance whole time and completely was not aware of the annual fee. Am I screwed?

Liz - Readynest Editor

Marion, you should contact your lender to explain the situation and ask if they have any concerns. It may not be an issue - but if it is, better to know now than at closing.

Emma

Got preapproved made a payment 1 day late the past two months but doesn’t show on my credit report would this affect me upon closing

Liz - Readynest Editor

Emma, if you don't see any changes to your credit report, your late payments will probably not be an issue. But it can't hurt to check with your lender to be sure!

Shay

Hello! Great article and tips! I am having a baby a week from closing and will be out on leave for three months. I have my 10% dp and closing costs with reserves in savings and my retirement account. I will also get short term disability (about 60% of my normal income) while out on leave. I told my lender that I was pregnant in the beginning and that the closing date would depend heavily on my csection date. Do you think any of this would be a problem?

Liz - Readynest Editor

Shay, if you've kept your lender in the loop about your pregnancy, you shouldn't have any issues. But if you're concerned, you could always reach out to your loan officer to be sure. Congrats on the new baby and the house! :)

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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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