If you have been approved for a mortgage for your new Regency home, you might be assuming you can breathe easy and concentrate on moving into your dream home. Although most of your hard work of building a good credit score and saving for a down payment is behind you, it’s important to remember that you must take care of your credit score until your mortgage paperwork is completely signed and your home has closed.
Avoid these 8 actions to ensure a smooth settlement into your new Regency home!
1. Don’t apply for a new Credit Card.
It may seem like a good idea to apply for a credit card at a home improvement store or a furniture store, but this could lower your credit score. If you do get approved for a new credit card, a lender may become concerned that you will spend up to your new credit limited and then default on your loan.
2. Don’t buy a new car.
Although a new car in your driveway would be a nice addition to your new Regency home, it is best to wait until after you close to buy a new car. The depletion of your savings account or addition of new debt could derail your mortgage application.
3. Avoid changing jobs
In order to get approved for a loan, your lender needs to verify employment, and you will need pay stubs in order to prove this. If you do change jobs, this could delay your settlement since the lender has no way of verifying your income. Sometimes life can be unpredictable, but avoid changing jobs if possible!
4. Don’t furnish the home before you own it
We know you have your favorite couch picked out already, but avoid putting large purchases on your credit card. This will effect your credit score and could potentially mess up your loan application.
5. Don’t close any Credit accounts
It makes sense to clean up your finances by closing unused credit cards and transferring your debt to a new credit card with a zero-interest balance transfer offer. However, this is bad for your credit score, because you lose points on your credit score when you have a higher usage of debt compared to your limit on one credit care and overall credit availability.
6. Don’t get behind on payments
One of the most important aspects of your credit score is making on-time, in-full payments, so don’t get too caught up in your new home that you forget to pay your bills!
7. Don’t move money without a paper trail
Your lender will need the most recent bank statements before closing, so if you have any unusual deposits you will need to provide complete documentation of where the money came from. Tip: Move the cash you will need for your home purchase into one account before you apply for a mortgage. If you haven’t done so, make sure you have complete and accurate records available.
8. Don’t spend your savings
You will need cash on hand for your down payments and closing costs, and your lender may even verify your cash reserves one more time, so make sure your funds stay in place.
Final thought: Remember the phrase “nothing has changed.” Your lender will recheck your credit score just prior to your closing date, so it is extremely important you make sure that your credit score has not changed. If you have any questions, ask your agent so you can turn your dream of homeownership into a reality!