You’ll often face a window of 60 to 90 days from the time you’re prequalified for your mortgage to the time you actually close on your new house. Most people wait patiently, eager to get into their new home.
However, some have learned the hard way that there are things you should NOT do while waiting to close on your new home. Do these things, and you could jeopardize qualifying for your mortgage and losing out on the house you so carefully chose.
If you’ve been qualified for a home loan and are waiting to close, avoid doing these things:
- Quitting your job. If you want to make a major life change like switching jobs, wait until AFTER you’ve closed on your house, especially if you don’t have a job lined up. If you’re moving to a better, higher paying job, you may think changing jobs shouldn’t matter. However, the mortgage lender will need to confirm your pay and your length of employment, so changing to a higher paying job can be a problem.
- Making large purchases. Now is not the time to buy a car or a camper or even a couch. Wait to buy expensive items until after you’ve closed on your house.
- Opening a new line of credit. The mortgage lender looks at your available lines of credit as potential liabilities. The lender knows that you could be as deep in debt as your credit lines. If you open a new line of credit, that’s just another liability and another reason for the lender to be cautious.
- Spending your savings. You’ll need to prove that you have a certain amount of cash available should you need it to pay the monthly mortgage in the event of job loss. Keep intact any savings you had when you qualified until after you close on the home.
- Close credit accounts. You were qualified for a mortgage based in part on your credit score. Right before you close, the lender will run your credit score again. If you close a line of credit, you affect your credit score negatively, especially if you’ve had that line of credit for many years. In addition, you affect your credit-to-debt ratio, which hurts your credit score.
If you’ve been qualified for a mortgage and are waiting to close, the best thing you can do is keep your financials as nearly identical as when you were approved for the mortgage. After you close on the house, you can have more freedom to do what you would like with your money.