Key Insights Maintain a steady grip on your finances and job situation after applying for a mortgage to steer clear of surprises before closing. Lenders will dive deep into your accounts, credit history, and liabilities again just before sealing the deal, ensuring your financial landscape hasn’t shifted dramatically. Swiftly answering any lender queries helps keep the momentum going toward your closing date.
Locking in a mortgage is a delicate dance — one misstep in your financial moves could derail the entire homebuying journey. Whether it’s your credit standing or loan eligibility, changing gears at the wrong time can cost you dearly. Below, we unpack common blunders that trip up prospective homeowners on the brink of closing.
1. Splurging on Major Purchases, Furniture Included
Before crossing the finish line on your home purchase, you’ve probably caught wind of the advice to curb spending on pricey items. But what exactly flags a transaction as “big” during underwriting? A flashy new car or a boat will definitely set off alarms at the lender’s office. Even seemingly harmless purchases like sofas or new appliances — especially if paid via installments — are better postponed until you’ve signed the papers.
These transactions can ding your credit score depending on your history, possibly shrinking the loan amount or pushing your interest rate into less favorable territory for the next 15 to 30 years. Worse yet, you might be hit with demands for a heftier down payment, complicating your path to homeownership.
When’s it Safe to Buy Furniture?
Once all closing day rituals are behind you, go ahead and grab that couch or dining set you’ve been eyeing.
2. Kicking Off a New Credit Line
Opening another credit account isn’t just a small tweak — it’s a red flag waving in lenders’ faces as they gauge risk. Protecting your credit health becomes crucial, especially if you’re skating close to the threshold needed to snag a mortgage. The slightest fluctuations can kill your chances of crossing the finish line with a signed loan.
3. Changing or Abandoning Your Job
Job hopping or quitting before closing is a sure-fire way to spook lenders, who crave stability and consistency in your employment record. Gathering the extra paperwork requested after a job change can stall your closing, and a pre-approval only gets you so far — it doesn’t lock anything in indefinitely. Stay on top of every deadline and paperwork request. Slow responses to a lender’s queries risk losing your agreed terms and forcing you back to square one.
4. Taking Out Personal Loans or Co-Signing
Snagging a personal loan or putting your name on someone else’s debt can throw a wrench into your mortgage approval just before closing.
| Front-end DTI | Portion of your monthly income spent on mortgage-related payments (principal, interest, taxes, insurance, HOA fees). |
| Back-end DTI | Aggregate of all monthly debt obligations compared to your income. |
If that loan payment inflates your back-end DTI beyond acceptable limits, lenders might slam the brakes on your application. Plus, if your credit score barely clears the qualifying bar, a fresh hard inquiry linked to personal loan hunting could push it down, jeopardizing your eligibility. Bottom line? You might have to walk away from the deal.
5. Overlooking Bill Payments
The whirlwind of homebuying can distract you, making bill payments slip through the cracks. Even a single missed payment can tarnish your credit history and dent your score.
It’s vital to distinguish a late payment — made after the due date but before the billing cycle ends — from a missed payment, which usually means over 30 days overdue. Many creditors offer grace periods, letting you pay late without penalties or credit damage. But a missed payment report can heavily weigh down your creditworthiness.
To dodge such pitfalls, consider setting bills on autopay or marking due dates on your calendar. Staying current on payments shields your mortgage prospects from avoidable setbacks.
6. Sudden Large Deposits
An apparent windfall in your bank account may look like a boon, yet unseasonal big deposits can prompt lenders to reevaluate your finances.
Why the fuss? If funds come from a new loan or unreported income, your debt-to-income (DTI) ratio may shift unfavorably. When gift money is in play for your down payment, the lender demands a gift letter confirming the source. Usually received at least three business days before closing, this document breaks down:
- The agreed purchase price
- All origination fees payable by the buyer
Remember to bring a cashier’s check — a bank-backed guaranteed payment instrument — to cover these costs at closing.
7. Neglecting the Final Walkthrough
Even if your new home is brand-spanking-new, a last-minute walkthrough is indispensable. This step ensures the property’s condition hasn’t changed and any negotiated repairs or requests have been fulfilled.
Coordination between your lender and real estate agent sets the closing schedule, making sure all parties align for the big day.
As Patricia Martinez-Alvidrez, senior escrow officer at Clear Title in El Paso, Texas, explains: “Once you visit the title company to sign all documents under notary supervision—and the seller has done their part—the escrow officer submits everything to your lender. After the lender verifies the paperwork, they give the green light to the title company to wrap up the transaction and dispatch funds following receipt of the wire transfer. That’s your cue to grab the keys.”
Quick FAQs
What Do Lenders Scrutinize Before Closing?
As the homebuying process unfolds over weeks or months, lenders revisit pivotal details like your credit report, income, and debts right before closing. The main goal? Confirming that nothing’s shifted since your initial mortgage application.
Can I Swipe My Credit Card Before Closing?
Using your credit card is permitted while you wait to close, but tread lightly. Limit charges to small items and clear your balance promptly. Avoid piling up debt that bloats your DTI ratio, which could reduce your loan amount or result in a last-minute denial.
How Can I Prep to Dodge Common Mortgage Slip-Ups?
Getting preapproved is your best bet to steer clear of common pitfalls. This process clarifies how much a lender is willing to loan you after a thorough financial inspection. Once preapproved — complete with down payment figures and borrowing limits — don’t stray from your financial routine: no big spending sprees, no job changes, no fresh credit lines. Keep your financial ship steady until you’ve got the keys in hand.
