You might think since you have the ‘clear to close’ from your lender that you are free to do anything you want with your finances before your home closing. Don’t make that mistake, though. There are ways that you can ruin your chances of closing on your loan if you aren’t careful.
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Don’t Open Any New Credit Accounts
No matter how many applications or ‘pre-approvals’ you receive in the mail, don’t open a new account. Don’t even inquire about the account. If there are any new inquiries on your credit report, it sends up a red flag to your new lender. They may think that you have a new credit line out there somewhere. They will want to know the details of the account to determine if it fits within your debt ratio or if you just ruined your chances of closing on your loan.
Don’t Close Any Credit Card Accounts
It may seem like a good move to close your old credit card accounts. After all, why keep them open? Aren’t they hurting your credit? What you might not know is that your old credit cards could actually be helping your credit. A small part of your credit score is comprised of the average age of your accounts. If you close your old accounts, you make your average account age younger, which can reflect negatively on your credit score.
Rather than closing your accounts, just leave them untouched. You don’t need to use them, but you should leave them open.
Don’t Rack up Your Credit Card Debt
Even after your lender gives you the ‘all clear’ on your purchase loan, you still have to wait before you buy anything. So hold off on those big furniture purchases and don’t buy new appliances. It can all wait until you close on your loan.
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If you rack up credit card debt, it can lower your credit score and damage your debt-to-income ratio. Your lender will likely pull your credit one more time right before you close on your loan. If they see that you suddenly have more debt than you had before, it may force the lender to go back to the drawing board to see if you still qualify.
Don’t Change Jobs
Even if you get the best job offer in the world before you close on your loan, don’t take it. If you do take it, make sure that your start date is after you close on the loan. Your lender will likely conduct one more verification of employment to make sure that you still work at the same place.
If you do change jobs, it can change the landscape of your loan. The lender would have to start the process all over again with your new income to make sure you still qualify for the loan. Because you started a new job, the lender may need to wait until you are there for at least six to 12 months to make sure that the job is stable and reliable.
The best thing you can do before you close on a loan is keep everything the same. This means your job, income, and your credit. It will only be a matter of a month or two before you can change things up, but changing anything during the loan process could leave you without the loan that you want.
