When you are buying a new home, applying for a mortgage is one of the most important steps. Unless you have cash to pay for a home, this may be one of the more stressful parts of home buying. If you have been wise with your credit over the years, paying bills on time and not opening an excessive number of accounts, this shouldn’t be something you worry about. When you apply for a mortgage, the lender will run your credit to determine if you are likely to be approved for the mortgage. Shortly before closing on the mortgage, the lender will pull an updated credit report to make sure things still look good. If you open new accounts or spend significant amounts of money on a credit card after applying for a mortgage, this will show up and could mean you are declined for your mortgage. Don’t let this happen to you. Here are five things you must NOT do after applying for your mortgage.
- Don’t open a new credit card account even if you don’t use it. Having available credit is as bad as using more credit. Wait until after closing to open any new accounts. This applies to any accounts INCLUDING furniture. Wait to buy furnishings for your house until after closing.
- Don’t buy a car or open any other installment loans. Each account added to your credit report will change your credit ratios and could impact your final loan approval.
- Don’t pay anything late. Many of your open accounts report to the credit reports monthly about the status of your payments. You don’t want anything to show up late right before closing.
- Don’t close any accounts. While this may seem like a good move, when you close an account, the credit is no longer available to you and could change your credit ratios making you have less available credit in comparison to total credit. This can negatively impact your credit score and if you were on the edge of qualifying could push you over.
- Don’t change jobs. If you have been looking for a new job for a while, hold this until you close on your new home. Your lender will check your employment history and a change in jobs right before closing is a big negative on their side. If you encounter a great opportunity, ask for a delayed start and explain the situation. A good company will be willing to wait for a great employee an extra 30-60 days so you can close on your new home before you change jobs.
Your mortgage lender is there to guide you through this process. If you have questions about something you are considering, ask before you do it to make sure you don’t change anything that the lender might view negatively.