There is much excitement after a home seller accepts a buyers offer and a mortgage lender approves there home loan application, but there are a few more hoops to jump through first. There is still a process before you get the keys in your hand and become a proud owner of your new home.
It takes anywhere up to thirty days or longer to close a mortgage loan and in that time mortgage lenders are aware that anything can happen to a lenders income and credit. Changes to your income or credit could jeopardize your loan so on the closing day there will be another review of your finances and final credit check. Some buyers are unaware of these last-minute checks and make a choice in the thirty day period that could threaten your home-owning dream.
We have put together four things that could kill your home mortgage closing.
1. Acquiring a New Auto Loan
You may think that buying a new car before your mortgage closing is not a big deal. And you may even have the finances to support both the mortgage payments and an auto loan. However, when you applied for the mortgage loan, the lenders requested all your debt information so they could work out what your debt to income ratio was. They work all their figures out on that percentage and usually a loan is not approved if it exceeds 36% to 40%. So it is not ideal that you purchase any new cars until after your mortgage has closed.
2. Charging Up Your Credit Cards
Just like buying a vehicle in the thirty days before closing, going on a shopping spree on your credit card is also not ideal. Keeping your credit card at the same balance (or lower) as when you first applied for your loan will ensure that the debt to income ratio will not increase and there will be no hiccups on closing.
3. Quitting or Changing Your Job
Mortgage lenders not only re-check your credit before closing they will also re-check your work status and income. Therefore it is a significant error if you quit your job before closing or change employment. The lender will postpone your closing and have to start the whole process again which could take weeks. If you’re thinking of quitting your job, think again.
4. Negative Credit Report Updates
It is essential that you stay on top of your credit during the mortgage process. Being open and honest with your lender about your credit history will ensure that nothing backfires during the closing and they will not be forced to pull out.