After all the things you go through during the home purchase process, you find the right home, you got an agreement with the seller and have signed on the line. Finally you get all your conditions met and the SOLD sign goes on the sign, you would think..... it’s done, all is great and nothing can go wrong.
However before getting too euphoric and going crazy before your actual possession day there are a few things where caution should prevail least you spoil the deal before the closing date.
Your bank has given you a mortgage commitment letter allowing you to waive the financing as a condition to your purchase, but that mortgage commitment comes with caveats. If you change your financial status before the mortgage is actually funded, that commitment from the bank is at risk.
The bank will usually double check your financial status just prior to closing and the results had better be the same as when they approved your mortgage. If it has changed, they have the ability to withdraw funding leaving you in a huge bind.
Here are a few examples of no-nos
Major Credit purchases. In your excitement and enthusiasm your make some major purchases for the new home. Could be a new bedroom suite, appliances, new car, boat or whatever. If it goes on credit it will negatively affect your Total Debt Service Ratio (TDSR). This is part of the formula the bank used in the first place. Talk to your loans officer to before you pull out that credit card.
Unusual Financial Transactions. Lenders will also take a last look at your recent financial transactions before funding the mortgage. Shuffling money around, or unusual deposits and withdrawals will raise red flags. If it is a gift from family for down payment, that intent should have been disclosed up front to the bank in the first place.
Late bill payments. Getting behind on bill payments before your closing/possession date can be devastating to your deal. Even a month late on a couple bills may show up on your credit score negatively. If your credit score was marginal in the first place and it goes downhill, you purchase may go the same way. Be really diligent in making timely bill payments.
Co-signing on another loan. A big no no as you are in essence committing to another loan if the primary signer has difficulty. You may have even forgotten about an old loan that you co-signed on years ago, but it may still be on attached to your credit score.
Changes in employment. Losing your job is never easy under any circumstances, having a layoff during the home purchase process is doubly bad. Even picking up a new job quickly for the same cash, may not prevent the lender from getting cold feet on the deal. Lenders are looking for stability in their loan portfolios.
It is a given that people will be diligent in their financial undertakings prior to applying for a mortgage and after taking possession and move in day. But you need to keep up the diligence in that closing period between getting your commitment letter from the bank and getting the keys to the new place.
Keep your mortgage lending officer up to date with any changes that you might encounter. Changes are best coming from you rather than the bank finding out on their own.
Have happy purchase, and move in.