Once your loan is approved, you are in the home stretch to closing on your mortgage. However the process is not complete and it is important to remain disciplined with your finances and employment and attentive to any conditions still needed by the lender. Here are the most common missteps during a mortgage transaction that can hurt your chances of closing on time, or in some cases, not at all.
An Increase in Debt
Although your loan has been approved, it’s important to refrain from increasing your debt-to-income ratio prior to closing. This means borrowers should NOT make any large purchases, like a new car or appliances for your new home. Instead, wait to purchase these items until your loan has funded. Any increase in debt is an increase the lender must take into account when calculating your debt-to-income ratio, so the lender will always recheck your credit prior to closing. If following the second credit check the lender discovers new liabilities or new credit inquiries, then your loan can be delayed or even worse you may not be able to close on your loan.
A Change in Job Status
In addition to rechecking a borrower’s credit score, lenders are required to reverify employment status. This means that if you lose your job or obtain a new job, you must alert your lender immediately. Not updating your lender could result in a loan delay.
Overall, to avoid delays in your mortgage process, it’s important to keep your lender updated on all changes to your employment and avoid opening any new debt before funding of your mortgage. For more information on how your loan status can change before closing, or to learn more about the mortgage process in general, contact one of our mortgage specialists and download The Ultimate Guide to Homebuying and Financing today.