I. Do Not Change Jobs or Become Self-Employed
Lenders like to know that you can pay them back. Changing a job just before closing, even if it gives you a pay raise, can put your real estate purchase at risk. There are some situations when a lender will be ok with a job change. Employees get transfers or promotions or new contracts all the time but talk to your loan officer before you do anything so they can guide you.
II. Do Not Buy a New Vehicle
Loans are approved based on a few things, and the ratio of your debt to your income is one of them. The amount of cash in your account is also noted. If either one of these changes, it could be enough of a difference for your loan to be denied.
III. Do Not Abuse Your Credit Cards
Your credit score is checked when you first talk to the bank. It can be verified a number times right up until closing. Changes on your credit card balance can affect your credit score. Even a small change can be enough for a lender to walk away from funding a loan.
IV. Do Not Spend Closing Money
There are significant rules regarding your closing money or your "cash to close." Like it sounds, this is the money you need to hand over at closing to finalize your purchase. Make sure this money stays available, in your account, at all times. Don't spend any of it...even if you know that you will earn enough before closing to pay yourself back. Even worse, DO NOT spend and plan to borrow for closing. Lenders have rules and a change to your cash to close could kill their ability to lend to you, even if they want to.
V. Do Not Omit Debt or Liabilities on Your Loan Application
We learned this in the second grade. Don't lie. Certainly, don't lie on your loan application unless you just want to waste some of your precious time. Lenders verify, verify and verify again before finally handing you money.
VI. Do Not Finance Furniture
You may end up sleeping on a blow-up mattress for a while, but please, please, don't forego your opportunity to close on your house because of financing furniture. Just like financing a car, financing furniture (no matter how little the amount might seem in comparison to your home purchase) is another liability. Your credit is re-pulled before closing and having new debts show up could cause a delay -- or worse, not closing at all.
VII. Do Not Originate Credit Inquiries
Each time your credit is checked, your credit score can adjust. When your credit is re-pulled before closing if your score has changed you may be stuck with it. If the score is lower, this could impact your mortgage rate and even cause you to be denied if the score falls below a certain limit.
VIII. Do Not Make Large Deposits Before Approval By Loan Officer
During the loan application process, the bank reviews your financials... but it's not quite as simple as showing a bank statement. If a large deposit that is inconsistent with your regular banking activity appears in your account, your loan officer will need more than just the dollar amount. Paper trails showing where the large sum of money came from are often required. If the money was given as a gift, proper documentation (letter from the giver including proof of funds for the gift and a paper trail of the transaction) will be needed.
IX. Do Not Change, Open, or Close Bank Accounts
Just leave this activity alone until after closing on your home. Establishing better credit does not happen overnight, the more accounts you open does not equate to increased credit. Likewise, closing an account does not raise your credit either, but could, in fact, lower it.
X. Do Not Co-Sign a Loan For Anyone
Raising your debt to income ratio by co-signing on (any) loan can reduce the "amount of home/condo" you can afford. Don't co-sign until you talk to your loan officer first.
Remember, lenders don't like change. Keep your entire financial picture as consistent as possible from loan application to closing to ensure a smooth transaction.