You received a pre-approval, found a home and had your offer accepted. Now all you need to do is relax and wait for closing, right? Well, not exactly. Sure, the odds are reasonably good that nothing major will go wrong. But that doesn’t mean that things can’t go wrong. A financial misstep now could change your mortgage terms and interest rate, or even get you denied altogether—even if you have got a closing date on the books. To make sure that doesn’t happen to you, Realtor.com lists some less-than-savvy money moves you’ll want to be sure and avoid.
- Moving money around
If you’ve been storing up cash reserves, do not move that money out of savings and into stocks while you wait to close. Why would someone do this? Well, maybe you’d like to make some extra cash off those reserves—besides, the money is just sitting there anyway, right? Wrong. It’s serving a real purpose: showing your liquidity. Moving money around can wreak havoc on your loan approval. You’ll need enough cash to cover the down payment, closing costs, and at least three months of mortgage payments. If the stock deduction dips your assets too low, you could be looking at a denial.
- Taking a leave of absence from work
Lenders are relying on you to be willing and able to work after they approve your loan—after all, it’s the only way to prove you’ll make those monthly payments. Things can happen, and sometimes you might have to take a leave of absence. But don’t risk it unless it’s completely necessary—or unless you’re prepared for your mortgage to get delayed or denied.
- Applying for new lines of credit
If you apply for a new credit card or request a credit limit increase a few months before closing, it probably won’t hurt you too much. But don’t let the credit inquiries accumulate. Rather than trying to figure out how many credit inquiries is too many or how much new credit you can take on without killing your mortgage, do yourself a big favor: Leave the applications alone until you’re through closing.
- Going on shopping sprees
Buying a new home is exciting, and you’re probably itching for new furniture and appliances. It’s alright to put some small charges on your credit cards, but it’s smart not to get too carried away. Experts agree you don’t have to be at a zero balance to get approved, but play it safe and hold off on shopping for big-ticket items until after you have the keys to the house.
- Taking a new job—even a better-paying one
Getting a new job halfway through the home-buying process can disrupt an already tedious paperwork process.
That said, some moves are more OK than others—like getting a promotion within your company or even making a lateral move to another. Lenders are less OK with your changing fields altogether. Even with a potential pay increase, that kind of switch is seen as too risky to mortgage lenders as you don’t have a proven track record of being able to work in the new field. Even if you do remain in the same industry, you should beware of switching into a role where your income is largely dependent upon bonuses or commissions—even if your annual income will end up being higher than your current position. Lenders can’t see what you haven’t earned yet, and they’ll factor that into your mortgage approval.