The home buying journey is an exhilarating experience in anyone’s life, and it all culminates in the closing process. While closing on your new house is relatively straightforward and hopefully, everything goes according to plan, there are several things that you should definitely not do during this time.
You might think that there’s no stopping it once everything has been set in motion. But unfortunately, some prospective homebuyers have learned the hard way that making the wrong moves during closing can have dire consequences.
Here are some of the actions you should steer well away from before and during your closing time.
Buying a car
Sometimes things just happen at really inconvenient times, but when you’re about to close on a house is definitely the worst time to make any other major purchase like a new car, a boat, a refrigerator, or any other major appliance. This will increase your debt-to-income ratio (DTI), which can seriously affect your ability to qualify for a mortgage.
Leasing a car is something that you should consider waiting on as well. Financing an auto loan and leasing a car aren’t quite the same thing. When you get a loan to purchase a car, it’s considered one of your assets, even though you will still owe payments. A lease agreement doesn’t transfer ownership to you even though it gives you an additional burden of debt.
Being late on payments
This is also not a good time to miss any payments on any of your current accounts. The loan underwriting process involves going through your finances with a fine-toothed comb to determine if you’re a reasonable risk for the lender — late payments show exactly the opposite.
If you need to open a credit card, wait until after you receive the keys and sign the final paperwork. Anytime you open a new account, it can lower your FICO score and mess with your all-important DTI as mentioned above.
Going on a spending spree
While it might be tempting to go out and start buying the latest furniture and home decor, an awesome new surround sound system, random stuff from IKEA, or all the fun smart home technology you’ve always wanted, running up a bunch of big credit card bills during the closing process is simply not a good idea if you’re serious about purchasing a home. If you do need to make some preliminary purchases, ask your lender about the amount and timing.
Changing career paths
No one enjoys being unhappy at work or feeling unfulfilled by their job. But switching employers during the closing window is something that you should avoid if at all possible. Lenders are laser-focused on the stability of your income, and quitting your job and starting another one can dramatically affect this — or at least their perception of it.
If you’ve been presented with a wonderful opportunity to make more money or advance your career that just can’t wait, talk to your lender. They may ask for additional information such as an offer letter or other written verification from your new employer.
Dreaming of starting your own business and becoming an entrepreneur? Great! Just wait until you’ve closed and your mortgage is fully funded. Many mortgage companies will not approve a loan for someone who’s self-employed unless they can show proof of several years of reliable, provable income from that same self-employment.
Annoying the seller
Closing on a property is a tempestuous time for everyone involved, including the seller. In a super-competitive housing market, anyone selling a gorgeous home at a decent price is going to be inundated with offers. If yours is the winning one, it pays to stay on the seller’s good side.
A common mistake some buyers make is to mention the appraisal. The homeowner will have worked with their real estate agent before putting the house up for sale and determined the listing price accordingly. If the appraisal that you order and pay for as part of the mortgage process comes back higher than the sales price, you’re getting a sweet deal and lenders love that. But you’re under no obligation to mention those results to the seller, and there’s no reason to plant the seed that they may have realized more for their sale.
Many people frequently still have an emotional attachment to where they’ve lived for years, even when it’s time to sell and move on. Telling them that you plan to demolish walls, rip out everything, and rebuild to suit your own style might not be the best strategy while they can still cancel the sale and choose another buyer.
However, if you notice drastic changes to the home during your final walk-through, such as suddenly broken fixtures or missing appliances that were supposed to be included in the sale, you should speak up immediately. It’s always best to resolve any issues as soon as possible.
Not doing your due diligence
The smartest things you can do during the closing period are to be prepared, be thorough, and stay calm. Stay in contact with your real estate agent and your lender. In this high-volume industry, things can fall through the cracks. Most closings have a strict deadline and if you don’t have your ducks in a row when it comes to needed financial papers, you could lose your dream home.
There are a lot of documents to sign, and you should read each one carefully before putting your name on the line. If possible, your real estate team should include an attorney who’s experienced in your state’s property laws and regulations. Buying a house is a huge investment and having a legal expert on your side is never a bad idea.
Every hopeful homebuyer is unique, which is why we offer each one of our clients personalized support, concierge customer service, and a full spectrum of real estate services. At Landtrust Title Services, our agents, attorneys, and title experts are here to help you with every step of the purchasing process. If you’re ready to take the next step toward getting the keys to the home you’ve always wanted, give contact us today!