So you found the right home to buy, got the offer accepted, made loan application, and the lender approved your loan subject to the home appraisal and re-verification of your employment and financial status just prior to closing. Congratulations! You are well on your way to achieving your goal.
You think it's a done deal, right? Well, it's not 'for sure' until the closing takes place. Be aware that from the time you make loan application to the actual closing, lenders have become very cautious about the entire home mortgage loan process. Even when you have a good down payment and good credit, issues arising at the last minute can result in your loan being denied.
We have THREE important pieces of advice to help ensure you don't encounter last-minute problems right before the closing:
1. DO NOT MAKE ANY MAJOR PURCHASES, MAKE ANY LARGE CASH WITHDRAWALS, OR COMMIT TO A NEW LOAN OR LEASE. Even after your loan has been approved, high-dollar purchases should be avoided until after closing. Don't assume that an approval is the end of the deal, because it is not. Lenders view major purchases as more debt for you and more risk to themselves. It is not unusual for a lender to deny a loan at the last minute because the applicant made a major purchase, such as a car, during the mortgage process. Since lenders assess your cash reserves during the loan approval process, paying for purchases with cash is also out of the question.
2. PAY ALL BILLS ON TIME AND DO NOT APPLY FOR ANY NEW CREDIT CARDS . . . THERE WILL BE A LAST-MINUTE CREDIT CHECK. Lenders are going to do another credit check shortly before the mortgage closing date. This is when the lender will discover any major purchases mentioned above. It's also the point that the lender will see if you have been delinquent in paying credit card and other debts since first applying for the mortgage loan. Such delinquencies can cause a dip in your credit score. In fact, even just applying for a new credit card between the approval and closing dates can possibly result in a credit score dip. Don't jeopardize the standing of your loan by not being prepared for a second credit check.
3. DO NOT MAKE ANY BIG CAREER OR JOB CHANGES. Lenders carefully consider your job stability and salary during the loan approval process. If the equation changes, such as when you change jobs, the loan may be pulled completely or at least delayed until you can demonstrate that your new job is stable and provides the financial resources necessary to pay the mortgage. Lenders especially frown upon an applicant changing industries during the mortgage loan process. If possible, postpone making any changes to your employment status until after you have the keys to your new home in hand.
Once your loan has closed and you are a new homeowner, then you can purchase or lease that car, buy that new furniture, and/or say yes to that great career opportunity. One word of caution . . . make sure you don't over extend yourself. There will be unexpected expenses and repairs once you become a homeowner, so you should have adequate disposable income to cover all your living expenses and then some.