Closing On Your New Home? 5 Important Financial Moves to Avoid | Hayden Homes

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October 11, 2021

Closing On Your New Home? 5 Important Financial Moves to Avoid

CLOSING ON YOUR NEW HOME? 5 IMPORTANT FINANCIAL MOVES TO AVOIDReaching the closing process is an exciting milestone. It’s the last hurdle before receiving the keys to your new Hayden Home. However, there are some major financial moves you’ll want to avoid so you don’t derail the process.
Some homebuyers may not be aware how these seemingly innocent activities can jeopardize closing on their new home. Save yourself the heartache and delays by avoiding these common money mistakes.

1. Not Sticking to the Timeline

Closing is time sensitive. It’s important to stay on top of your deadlines and make sure paperwork is submitted in a timely manner. There are a lot of moving pieces happening and missing an important deadline or not turning in paperwork can not only delay closing, but you also risk losing the house for breach of contract.
Don’t be afraid of following up with your lender, realtor, and anyone else working with you during closing to make sure you stay on schedule.

2. Changing Jobs

When you’re closing on a new home, avoid changing jobs if at all possible. Since lenders review your employment history to confirm a history of steady income, changing jobs will mean lenders will need to reverify your employment. This can be tricky with a new or prospective employer and can take longer to complete.

3. Making Large Purchases

Hold off on large credit purchases, like furniture or a new car, until after you’ve closed on your new home. Why? Because you could risk losing your mortgage! Your mortgage preapproval doesn’t guarantee it’ll be funded. Lenders will review your credit report again in the final stages of closing to verify your ability to handle the proposed mortgage payments. You want to make sure your credit history remains as steady and strong as it was when you first applied.

4. Opening or Closing Credit Accounts

Opening or closing credit accounts can affect your credit score and risk your mortgage. You want to keep your credit history as stable as possible to protect your credit score. Most people expect their credit to take a hit when opening new credit accounts, but may not realize that closing certain accounts may have a negative impact on their credit score.
Lenders use different factors to calculate your credit score: credit utilization – the portion of your credit you’re currently using, average age of open accounts, and the credit mix are taken into account. While paying off a loan will reduce your credit utilization, which is great, it’ll also lower the average age of your open accounts and the types of credit you have. This can cause your credit score to take a dip.
If your credit is on the edge of qualifying for a loan, or a specific interest rate, this decrease in your credit score can be the difference between qualifying or not. When in doubt, check with your mortgage lender first.

5. Depositing Unsourced Money

Your finances are an open book during the lending process. You must disclose relevant information like income, bank statements, and credit history to your loan officer so they can determine your loan eligibility. Every loan program requires large deposits to be documented from an acceptable source.
Your income is verified through your bank statements. However, if you make a large deposit of unsourced money, whether it’s for your down payment, closing costs, or a gift from family, it must be properly documented. Lenders want to make sure you didn’t take out a new loan or that you have an unreported source of income. They also want to know the money came from an accepted source (it can’t come from someone who will benefit from the home purchase). Depending on the type of loan you’re applying for, you may not be able to accept down payment gifts.
Failure to properly source large deposits can raise red flags to lenders and delay your loan approval.
Your mortgage loan officer will help you navigate the closing process. They’re on your team and will do everything they can to help you get your new home.
If you’re looking to buy a brand-new home in the Northwest, we can help. We have new home communities throughout IdahoOregon, or Washington and our team is ready to help you move into a home that’s just right for you at any stage in life. Contact us today.