You found the home. Your offer was accepted. You're in escrow. Time to celebrate and start buying furniture, right? Not so fast.
Getting the offer accepted does not mean the house is yours. There are still hurdles to pass. Not only are their contingencies to be removed (save that for another post) but there is a loan process occurring that can't be messed with. Here is how to avoid any complications.
Don't #1 : Buy a Car or Finance Any Large Purchase
Why it matters: A client once who bought a car three days before closing and almost lost the deal. Seriously. When you finance a car, your monthly debt obligations go up. Lenders calculate your debt-to-income ratio, how much of your monthly income goes toward debt payments. If that number jumps because of a new car payment, you may no longer qualify for the loan you were approved for. Your lender could reduce what they'll lend you, change your rate, or deny the loan entirely sometimes days before closing.
Don't #2: Open New Credit Cards
Why it matters: I know you want to purchase things like bedding and curtains and new art, it's so damn fun, but....opening a new credit card triggers a hard inquiry on your credit report, which can lower your credit score. Even a small drop can push you into a different rate tier and cost you thousands over the life of your loan. And if the new card has a balance, it affects your credit utilization too.
Don't #3: Close Existing Credit Accounts
Why it matters: This feels counterintuitive, it would feel obvious that the less debt the better. However, not in this case. Closing accounts reduces your available credit, which increases your credit utilization ratio and can lower your score. Leave everything open and untouched until after you close. To be honest closing credit cards is not usually a good idea ever. You always want to have more credit vs. how much debt you have.
Don't #4: Make Large Cash Deposits Without Documentation
Why it matters: Lenders scrutinize every dollar in your bank account. If a large deposit appears that they can't source and document, they may not count those funds toward your closing costs or down payment. Every significant deposit needs a paper trail (a gift letter, a transfer record, a pay stub). No paper trail, no credit for the funds. They are not trying to have someone who received a bag of cash from uncle Richie use the money without knowing where this came from.
Don't #5: Change Jobs or Go Self-Employed
Why it matters: Lenders approve your loan based on your current employment and income. Switching jobs — even for more money — can cause your lender to pause or restart the verification process. Going self-employed is even more complicated since lenders typically want two years of self-employment history. Wait until after closing to make any career moves. Like if this is not possible I understand but talk to your lender about it. No one is saying beg in the HR office when they are laying you off.
Don't #6: Co-Sign on Anyone Else's Loan
Why it matters: When you co-sign, that debt shows up on your credit report as your own. Even if you never make a single payment, lenders count it against your debt-to-income ratio. This can change your qualification status overnight. Kelly is going to have to ask her other BFF to co-sign or get her sh*t together for once on her own.
Don't #7: Miss Any Bill Payments
Why it matters: Lenders pull your credit again right before closing, sometimes the day of. A late payment that hits your report in the final stretch can drop your score and jeopardize your loan approval. Pay everything on time, every time, until you have your keys. You can do it, set an alarm on your phone, put everything on autopay. You are an adult now. You got this!
The Bottom Line: Boring Is Beautiful During Escrow
The best thing you can do once you're under contract is keep your financial life completely still. No big moves, no new accounts, no major purchases. There will be plenty of time to buy furniture and celebrate once you close. Boring but safe. Make a pinterest board instead. It will satisfy the itch.
Myself and your lender are working hard to get you to the finish line. The best thing you can do is keep everything exactly as it was when you got approved.
When in doubt call me before you do anything financial. That's what I'm here for.
Questions about the escrow process? Let's talk.
I walk every buyer through this before we go under contract so there are no surprises. That's what having me in your corner looks like.
