Closing on a House? Don't Make These 3 Financial Mistakes.
Updated: May 23
If you're getting ready to close on your new house, you're probably eager to get the ball rolling. Don't delay the closing by making these 3 mistakes that can delay financing and closing.
Mistake #1: “I need that new car, and I need it now.”
You don’t. Not right this second, anyway. Of all the ways that buyers can “blow up” their financing just before closing on a home, the purchase of a new car seems to be the most prevalent. Financing a new vehicle can throw a massive wrench into things. For those buyers who are close to the limits of acceptable debt-to-income ratios, a car loan could be just enough to tip the scales, meaning you no longer qualify for your mortgage. You may be able to get away with this if you pay cash—and if that chunk of cash doesn’t remove a substantial amount from your reserves. That said, you should always run the decision by your lender before you head to the car lot.
Mistake #2: “I’ve had it with my job…time for a change.”
Job changes occasionally occur during a real estate transaction, and sometimes this is entirely unavoidable (say, in the case of a job transfer that takes one out of state, for example). However, should this situation arise for you, we suggest open communication and a proactive approach. Work closely with your lender and employers throughout the process to ensure things continue to run as smoothly as possible. No lender wants to be surprised with a job change just prior to your closing, and it is all but guaranteed that this will result in a closing delay or even default.
Mistake #3: “I’m buying a house, and I must have sofas.”
True…ultimately, you’ll need some furniture, but consider easing into the purchase of everything you want for the living, family, and bedrooms of your new home. For many of the same reasons that buying a car can cause the process to come crashing down, so can furniture purchases. It’s important that you avoid going overboard with your sofas, beds, rugs, and art. A few inexpensive pieces purchased with cash is unlikely to cause issues, but piling up on purchases with personal (or store) credit cards just might. It isn’t uncommon for lenders to run one last credit check before closing, and new purchases like this could raise some very red flags.