What Not to Do Before Closing on a Home

Once you're in escrow, your loan approval is based on a snapshot of your finances. Lenders often re-check credit, employment and assets right before funding. Changes during that window can delay closing or, in some cases, change whether the loan works at all.

Here's what I ask my clients to avoid until the deed records.

Don't open new credit

A new credit card, car loan or store financing offer adds an inquiry and possibly a new monthly payment. That can lower your score and raise your debt-to-income ratio. Even "0% for 12 months" furniture financing counts.

Don't make big purchases on credit

It's tempting to buy furniture or appliances for the new place. Wait until after closing. Running up balances changes your ratios and can lower your scores.

Don't change jobs without talking to me first

Lenders verify employment, often within days of closing. A move to a similar role with similar pay may be fine, but switching to commission pay, self-employment or a different industry can create problems. If a job change is coming, let's talk about timing before you accept.

Don't move money around unnecessarily

Underwriters review bank statements line by line. Transfers between accounts, cash deposits, or moving investments around each create documentation requests. Keep your funds where they are unless we've planned the move together.

Don't deposit large sums without documentation

If you receive a gift, a bonus, or sell something, tell me before you deposit it. Gift funds generally need a gift letter and proof of the transfer. Cash that can't be sourced may not be usable for closing.

Don't miss payments

Keep paying every bill on time, including ones you plan to pay off later. A single late payment can affect your score and raise questions.

Don't close accounts

Closing old credit cards can change your credit utilization and the average age of your accounts. It feels responsible, but it's better to wait.

Don't co-sign for anyone

Co-signing adds that debt to your profile, even if you never make a payment on it.

Don't ignore emails or requests

Conditions often have deadlines tied to your contract. Quick responses help keep your closing date and protect your contingencies.

An example

Here's a hypothetical. A buyer is approved with a debt-to-income ratio just inside the program's limit. Two weeks before closing, they finance a new car with a $700 monthly payment. On the final credit check, the new debt pushes their ratio over the limit, and the loan has to be restructured. They might need a larger down payment, or the closing gets delayed. The car could have waited a few weeks.

What you *can* do

• Keep working, saving and paying bills as usual.
• Get homeowners insurance quotes early.
• Plan your move and utilities.
• Ask me anytime you're unsure. A two-minute call can save a lot of trouble.

Questions?

If something comes up during escrow, whether it's a job offer, a gift from family or an unexpected expense, contact me before you act and we'll figure out the best way to handle it. Not in escrow yet? start your pre-approval to get started.