What to Tell Your Buyers Not to Do Before Closing on Your Home

2.1.2022 | Category: Homebuying

You’re so close to the finish line that you can taste the sweet nectar of closing on your client’s home loan. All their paperwork is in underwriting and you have a good feeling everything will come back approved with ease.

Still, there’s a looming cloud over your head filled with worry that your client might do something they shouldn’t in these last few days of escrow.

If you’re a seasoned agent, you know that anything can happen in real estate. But there are some tips you can give your homebuyers to help ensure closing on their home isn’t filled with surprises or worse, denials.

Telling your client to keep their finances in good standing is a no brainer. But what are some of the specific actions you should tell your clients to avoid before they step onto the welcome mat?

Any inconsistent financial information that pops up when verifying your client’s home loan docs could jeopardize the loan, so tell them to avoid making these moves while their loan is about to close.

Don’t Switch Jobs.

If you're in the process of buying a home, wait for your home loan to close before accepting a job offer and putting in your two weeks. This is because when your home loan is in the underwriting phase, your lender verifies your employment, income and confirms your debt to income ratio (DTI). If the underwriter calls your employer and they don't confirm you work there, this will be a red flag and could cause your home loan to fall through.

Don't Buy or Lease A New Car.

Any large purchase or new line of credit will impact your debt-to-income ratio (DTI) and risk approval on your home mortgage loan. During the underwriting process, the lender will likely run your credit to ensure you are still able to responsibly manage a mortgage payment. A large purchase will show that you potentially use credit irresponsibly and could jeopardize the home loan approval.

Don't Run Up Credit Card Debt (or Open New Credit Card Accounts)

While it might be tempting to get a head start on appliance shopping, it’s imperative that you wait until your mortgage loan closes and you’re settled into your new home. Any changes to your credit usage or new inquiries could delay approval of your home loan and isn’t worth the hassle of having your loan approval delayed or your home loan fall through.

Don't Forget To Inform Your Lender To An Influx Of Cash.

If you are anticipating any sort of large influx of cash such as an inheritance or a gift, be sure to inform your lender ahead of your home loan going into underwriting. While your mom and dad might be excited to give you cash to help pay for furnishings, kindly let them know that this could cause your home loan to be denied and to wait to help you buy that new couch until you get the keys.

Don’t Legally Change Your Name

If you’re one of the many newlyweds looking to purchase a home with your new spouse, congrats! If you’re in the process of having your home loan approved, don’t even think about filing for a name change. Again, any inconsistencies that show up in underwriting could prolong the approval process or risk approval all together. Ensure your loan documents match your valid forms identification to ensure your documents can be legally notarized and approved.

Don’t Change Your Address

You might be excited to make it official. Perhaps your drivers licence is expiring and it seems easier to renew and update your address at the same time. Don’t. Again, your loan documents need to match your legal forms of identification and if they don’t, this could snarl the approval process and send your underwriters into a spiral.

Don’t Co-Sign for Any New Loans

Tell your sister she will need to find someone else to cosign on her new business loan. You’re in underwriting and while you’d love to help, it could absolutely risk the approval process. Avoid having anyone add you as an authorized user to a line of credit as well. Even if you’re the newly appointed treasurer of your professional networking group and part of your duty is to be the authorized signer on the chapter credit card, this could show up on your credit report and cause delays in your loan approval.

Don't Apply for Any Consolidated or Deferred Loans.

Any changes to your credit report could result in delays in your home loan approval. While it's totally understandable to want to consolidate debt or potentially defer loans in advance of taking on a home mortgage loan, this will show up on your credit report and may look like you aren't able to balance your lines of credit well.If you really feel like you might need to consider different ways to manage your credit, try your best to wait until you're closed on your home mortgage loan to take any actions.

While some of this advice seems like common sense, many first-time homebuyers may have never heard that these common actions could cause confusion for your underwriters, adding to more paperwork and more verification. Even seasoned homeowners might have forgotten how much goes into the underwriting process and how every item needs to line up.

Ensuring your clients are well informed ahead of time, can help ensure a smooth transition from prospective homebuyer to homeowner.