What you do financially after you’re approved for a mortgage matters. 

You’ve found the right house, you’re pre-approved for the mortgage and the closing is scheduled—don’t turn your attention away from your credit just yet! While lenders pre-approve home loans, they continue to monitor your credit up until closing. Here are three money moves to avoid when buying a home.

Avoid changes in lines of credit

It’s no surprise to most people that you shouldn’t open any new lines of credit or credit cards during the mortgage process. Many folks aren’t aware they shouldn’t close any credit accounts either. The reason is that opening or closing lines of credit can change your credit score as well as your debt-to-income ratio.

A decrease in credit score or increase in debt-to-income ratio could cause a lender to raise the interest rate or deny the loan.

Hold off on big credit purchases until after closing

Even if you’re well under your credit limit, a change in spending patterns are a red flag for lenders. Delay any major credit card purchases until after the closing.

Don’t make big deposits or withdrawals

Sudden shifts in bank account balances will surely draw the attention of a lender. A large deposit may indicate a loan was taken out or a large withdrawal might indicate financial distress.

If a family member plans to give you money to help with a home purchase, it won’t attract extra scrutiny if the deposit is made to your bank account at least 60 days before you apply for a home loan. Lenders look back on statements for two months.

If you do receive a large sum during the mortgage process, like a bonus from work or an IRS refund, the source of the funds will be clear to the lender. If a large sum is deposited from the sale of an item, be prepared to show your lender a bill of sale.

The common element among the financial moves to avoid is showing a lender a pattern of instability. Significant changes in your credit could lead a lender to deny final approval. Between the time you’re pre-approved for a mortgage and when the sale closes, keep your finances steady.

Get all your home mortgage questions answered by contacting one of our knowledgeable Mortgage Loan Officers.

 

All loans subject to approval. Rates, terms, and conditions are subject to change and may vary based on credit worthiness, qualifications, and collateral conditions.