Congratulations on your decision to buy a home! You’ve taken the first step already and have been pre-qualified, so you know what you can afford. While you’re shopping for that perfect home, there are some things you need to do, or not do, so when the time comes to finalize that mortgage loan at closing, there are no surprises to stop the process:
Don’t take on any new debt and keep paying your bills on time. Don’t charge anything more on your credit cards or if you absolutely have to, keep your balance 10% below your line of credit. That new living room furniture or upgrading your car needs to wait till after you have closed on your new home and have the keys in hand. If you make weekly purchases on credit card for your gasoline, keep doing that, but keep paying the card down as you have too.
Keep your existing job – no matter what! Don’t change shifts; don’t change anything that can make you look unstable. The only change that is okay before you close and have the keys to your new home is a job with better income. However … you will need to wait until you have passed your probationary period on the new job before attempting to close. You may want to take a proactive step and request a letter of intent from your new employer that states your new job is permanent that you can present to your intended lender.
Secure and protect your credit from ID theft. There are a variety of services available that will monitor your credit information as well as the credit card companies or your bank. Even a credit check will create notification to you so that you know somebody has your personal information. This allows you to take protective action and stop anything that may be fraudulent activity.
Don’t change banks or consolidate credit card debts. If you have been pre-qualified, don’t change a thing about your debts other than pay them down and keep them down. Even changing your checking or savings account is activity that will make a lender think twice before funding a mortgage.
Don’t change insurance companies or policies. This is your existing homeowners or renters insurance, car insurance, health insurance or life insurance. While it may seem like you are taking action to free up monthly income, wait.
In summary, remember, that even though you have been pre-qualified, until you have closed and have the keys to your new home in hand, your mortgage application is still pending. Lenders will review all aspects of funding you a mortgage again before closing and any change such as a new large purchase on credit or change in income can stop the process.