So, you’ve found your dream home, gone through the loan application process, and received preapproval from your lender. It may seem like smooth sailing from here, but be aware that there are several pitfalls that can potentially delay your loan closing. To ensure a smooth and timely closing, it’s crucial to avoid these common mistakes. Let’s dive into the nine pitfalls you should be mindful of:
- Don’t make a big-ticket purchase: One of the biggest mistakes you can make during the home-buying process is making a significant purchase before closing. This can deplete your cash reserves or limit your ability to repay the loan. It’s best to maintain the status quo and avoid any major financial changes until the loan closing is complete.
- Don’t quit or switch your job: Changing jobs or quitting your current one can create challenges in verifying your income stability. Lenders prefer borrowers with a stable employment history, so it’s wise to avoid any job-related changes until after the loan closing.
- Don’t open or close lines of credit: Opening new lines of credit or closing existing ones can raise red flags for lenders. They may view these actions as signs of financial instability, which could make you appear riskier as a borrower. It’s advisable tomaintain your current credit situation until the loan is closed.
- Don’t pay bills late: Late payments can negatively impact your credit score, which is closely scrutinized by lenders during the loan approval process. It’s essential to pay your bills on time and maintain a good credit history to avoid any delays or complications during closing.
- Don’t ignore questions from your lender or broker: Open communication with your lender or broker is vital. Ignoring their inquiries or failing to provide requested documentation promptly can lead to delays or even postponement of the closing date. Stay proactive and responsive throughout the process.
- Don’t let someone run a credit check on you: Every time a creditor or lender runs a credit check on you, it leaves an inquiry on your credit report. Multiple inquiries can lower your credit score. Avoid unnecessary credit checks until after your loan has closed.
- Don’t make large deposits into your accounts: Large, unverified deposits into your bank accounts can raise questions for lenders. They prefer to see a clear and transparent financial picture. If you receive a significant sum of money, consult your lender about the best way to handle it without causing any complications.
- Don’t change bank accounts: Changing your bank accounts during the loan process can slow down the verification process. Lenders rely on a consistent paper trail to verify your financial history. Keeping your accounts stable and unchanged will facilitate a smoother closing process.
- Don’t take out or co-sign any new loans: Taking on new loans or co-signing for someone else can increase your debt-to-income (DTI) ratio and limit your ability to repay the loan. It’s best to refrain from any new loan activities until your home loan is closed successfully.
Remember, just because you’ve been pre-approved for a loan doesn’t guarantee a smooth closing. Lenders carefully review your financial information, and any changes or red flags can potentially delay the process. It’s crucial to consult your lender if you have any concerns or questions throughout the home-buying journey.
In conclusion, avoiding these nine pitfalls can significantly increase your chances of a timely and successful loan closing. By maintaining financial stability, staying communicative, and seeking guidance when needed, you’ll be on your way to becoming a happy homeowner. Enjoy the journey and the excitement that comes with it, and soon enough, you’ll be unlocking the door to your new home.