For the majority of buyers, the ability to obtain some kind of mortgage financing and maintain the loan in place to closing is primary to a home purchase.
The steps to borrowing for buying a home are basically as follows:
- A buyer first has to qualify or be pre-approved for a mortgage amount based on their income, credit history, employment and other criteria.
Pre-approval is preferred as it locks in the interest rate for up to 120 days. This protects the buyer from any rate increases. Yet the buyer will usually receive the benefit of a rate drop.
- Once the buyer has secured an accepted offer conditional on a mortgage, he or she can now formally apply for the mortgage needed.
On approval of the funding, the buyer now has the ability to remove the mortgage condition from the offer. Provided all other conditions have been met, the Agreement of Purchase and Sale is now unconditional and headed to a successful closing...or is it?
Maintaining Your Credit Score Before Closing
Between removing conditions and the closing date, the commitment to mortgage the purchase is subject to the buyer’s credit rating being upheld. Otherwise the funding is at risk of being withdrawn by the lender. This would place the buyer in default of the contract to buy.
Simply put, a lender will check a buyer’s credit rating again just before closing as part of their due diligence and to minimize risk.
Here are 6 ways to ensure that your mortgage stays in place:
- Abstain from buying large ticket items, charging these amounts to your credit or credit lines,
- Avoid late payments or late fees on bills, existing loans and credit cards,
- Once your mortgage is secured, don’t comparison shop with a number of lenders for a better rate as this too affects your credit score downward,
- Don’t apply for more credit cards or fill out a loan application with anyone except your lender,
- Avoid changing bank accounts or transferring money between existing accounts,
- Opening retail or department store cards to take advantage of their discounts can also hurt your score.
Though good money management is always important, it’s especially vital before a purchase closes.