Planning to close on a home? During the mortgage loan process, you should be very careful to avoid making any errors that could negatively impact the process. We are happy to provide some tips for avoiding a few of the most common mistakes when closing on a home.
Do Not Move Money Around
For the most part, you should try to keep your money in one place throughout the mortgage loan process. You want loan originators to be able to document the source, and keeping it together is the easiest way to do so. If you must move some money around, make sure that it is traceable. If not, the closing process could be delayed.
Do Not Apply for a New Credit Card
Research shows that before closing on a home, homebuyers tend to increase their credit card spending by almost three times their previous rate. Be careful about this, as you do not want your credit score to be negatively impacted. Most importantly, do not apply for a new credit card during this time. Doing so could potentially cause your loan to be denied. Closing a credit card could be detrimental for your loan as well. It is best to talk to the loan originator before making any of these decisions concerning your credit.
Save the Big Spending for Later
The idea of finally moving into this home has you very excited and you want to get a jump start on your appliance and furniture shopping. We get it. If we could offer a word of advice, it would be to wait. Purchasing anything substantial could be damaging to your debt-to-income (DTI) ratio, and not look very good to the loan originator. Even worse, it could prevent you from closing on the home. Though you may think that you can afford it and it won’t be a problem, you are better off waiting. This way, you can feel more secure.
Do Not Switch Jobs
Switching jobs just before closing on a home is a recipe for disaster. This is because you have to submit a variety of important documents to begin the closing process, such as proof of employment, pay stubs, and tax returns. Switching jobs will require you to start this whole process over, and you will not have access to some of these documents right away. Therefore, the safest approach is to wait until after the closing process is over to change jobs.
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