Yahoo Finance I’m a Real Estate Agent: Here Are 8 Things You Must Never Do Before Closing on a House
Buying a house can be complicated and stressful, especially if the closing process takes a long time — which it often does. While a lot of it’s a waiting game, what you do during those weeks or months before closing plays a crucial role in how successful the entire transaction ends up being. That’s what many people end up going through a real estate agent who can help guide them through the process and prevent any mishaps along the way.
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Whether or not you use an agent, however, there are some things you should simply never do while closing on a home. Here are the big ones, according to Danielle Andrews, a real estate agent at Realty ONE Group and Lindsey Harn, a top agent at Christie’s International Real Estate.
Apply For Other Loans or Lines of Credit
When closing on a home, Harn said do not take on any new debt. Wait to take out that interest-free loan from Home Depot on a new household appliance until after you get the keys. Hold off on applying for a new credit card or getting financing for your dream car. All these things can wait until after the process is finalized.
If you must take on new debt, be sure to tell the lender as soon as possible.
“Taking out any new debt that has not been disclosed to the lender can cause a huge problem,” she said.
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Fall Behind on Payments
When it comes to buying a house, consistency is key — especially in your credit and finances. Whatever debts or bills you have, don’t miss any payments.
“Don’t think just because you’ve been preapproved or even approved with conditions, that you can start making late payments or even skipping payments on bills and debts,” Andrews said.
Even one or two missed payments can affect your credit score and hurt your chances of getting a loan. Fall too far behind and you could end up losing out on the transaction altogether.
Get Divorced
Life happens, but if you can hold off on a major life change like filing for divorce, you’re probably better off. The same goes for filing for separation.
“Filing for a divorce in the middle of your transaction can throw a huge wrench in things and could prevent the transaction from closing in many states depending on the details of the separation [or] divorce,” Harn said.
This is often the case when you and your partner initially applied for home financing together and the lender is counting on both of your financial and credit situations for the loan approval process. But even if only one of you is on the loan application, you might want to wait until things settle down with the house before filing for divorce.
“This one sounds weird, but it can impact how title is taken and the income the lender is using to qualify you for the loan, especially if you are receiving down payment assistance,” Andrews said. “Things could get very complicated with the loan quickly.”
Co-Sign For Anything
Just as you shouldn’t take on new debts of your own, you also shouldn’t co-sign for anything.
“I know it can be tempting to help a relative with their first car purchase, but that will need to wait until after closing,” Andrews said. “Don’t think that just because you co-signed that your lender won’t find out about it.”
Quit Your Job
Most mortgage lenders require you to have at least two consecutive years of employment before they approve a home loan. So, if you’re in the middle of the closing process, don’t leave your job.
“Switching your main income source could also cause an issue with the closing and your ability to qualify for a loan,” Harn said.
Ignore Your Lender or Fail To Communicate
Communication is key to ensuring a smooth closing process and that there isn’t any confusion or unnecessary stress along the way.
“It’s important to communicate with all [parties], especially your lender, throughout your entire loan process,” Andrews said. “People can get married, divorced, start a new job, buy a car and more during the homebuying process.”
“However, they absolutely need to speak with their lender first, so everyone is clear on the implications and the parameters,” he said. “It’s not impossible, just not quite as ideal.”
Make Large Cash Deposits
If you have multiple checking and savings accounts and are thinking about consolidating them by transferring large chunks of cash from one to the other, you might want to wait until after the closing process is over.
“Any large deposits must be seasoned or verified,” Harn said. “A large deposit is typically considered anything more than $500. Due to [the Dodd-Frank Act], all deposits must be verified.”
Of course, if you can prove where the money comes from, this might not be such an issue.
Make Assumptions
Making assumptions is a surefire way to delay the closing process, so try to avoid doing this as much as possible.
“Don’t make assumptions. Ask questions,” Andrews said. “There’s no dumb question in real estate. Be sure to get a clear understanding and directive.”
What You Should Do Before Closing on a House
And just so all your bases are covered, here are a few things you should do to improve your chances of a successful transaction — and minimize stress:
Keep the lines of communication open. “When in doubt, I always tell my clients to check in with me and their mortgage lender prior to making any major changes to their finances, especially in the middle of an escrow,” Harn said.
Learn as much as you can. The closing process can be confusing if you don’t know what to expect. Speak with your real estate agent or lender about anything you don’t fully understand. They should be happy to clarify it for you.
Keep your finances and credit stable. It can’t be stressed enough how important it is to avoid new forms of debt or sudden or major changes to your income or credit score.
Handle gift funds appropriately. “Any gift funds should be properly seasoned or arrangements for the gift funds should be sent directly to closing,” Harn said.
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This article originally appeared on GOBankingRates.com: I’m a Real Estate Agent: Here Are 8 Things You Must Never Do Before Closing on a House
