You Ask, We Answer: Can I Make a Big Purchase Prior to Closing?
Your Calcagni Real Estate agent found you a Connecticut home you fell in love with and you’re finally in contract to buy it. Congratulations! Now that you’ve secured your mortgage lender and are waiting for the closing, it’s important to know what to do to keep your deal together–-and what not to do. At the top of the “not” list? Making significant purchases. Whether you need a new car or have your eye on that dining room set for your new home, holding off on making sizable purchases prior to closing is important to keeping your lending deal in tact. Here’s why.
Avoid making large purchases prior to closing
Your mortgage amount and rate is based on numerous factors, including your credit score. When your mortgage lender is underwriting your loan, they can check your financials–including your credit score and debt-to-income ratio–and if anything has changed, they may change their mind about lending you the money to purchase your house…even if you’re pre-approved. That’s because that pre-approval is contingent upon the financial information you provided at the time. Should anything change if they check your financials again along the way, they have the right to rescind that approval.
Big flags to mortgage companies include purchases that impact your debt-to-income ratio and credit score, such as large purchases that have to be paid off over time like a car or furniture for your new home. But the warning to not make big purchases prior to closing extends to cash purchases, as well. Your lender will want to see what type of cash reserves you have on hand as well as your credit score, and a dwindling cash reserve can be a red flag for your lender.
When you purchase a big ticket item, you may be putting your mortgage deal in jeopardy, including paying higher interest rates or even qualifying for a lower loan amount–and situations like this can mean missing out on the home you and your Calcagni Realtor have worked so hard to find. In short, it’s best to wait on making large purchases prior to closing, even if you think you can afford them.
Resist the urge to alter your line of credit
Like a major purchase, altering your line of credit prior to closing can complicate your lending deal. Resist the urge to open a new line of credit or close out an existing credit account before you close on your house, or your actions may get flagged during the underwriting process. This is especially true if you have a credit score that skews toward the lower end; you do not need anything to further ding your credit rating! The name of the game here is stability–and that means keeping things status quo until you close on your new Connecticut home.
Keep your current job until you close
It may seem surprising, but in addition to not making significant purchases or doing anything to alter your credit score, staying in your current job can be crucial to your mortgage lender. While we don’t live in a perfect world and this may not always be a choice, if you do have a say in the matter, stick it out at your current job so your mortgage underwriter can review your employment history and understand exactly how much income you have coming in. Again: Typically, mortgage lenders like stability. The less surprises you have until closing, the better off you’ll be.
Do you have questions about what else may impact your mortgage prior to closing? Reach out to your Calcagni Real Estate agent and have a candid conversation with them. They’ll be able to help answer your questions and guide you to ensure you can close on your new Connecticut home without any added stress.