Understanding What NOT TO DO after an accepted offer
Congratulations! You’ve received a firm offer on the home that you want. This is an exciting milestone in the home-buying process, but it’s also a critical time to be vigilant. The period between accepting an offer and closing the sale can be fraught with potential pitfalls that might jeopardize your financing. To help ensure a smooth path to closing, here are seven (7) key things to avoid once you’ve received that firm offer.
1. Don’t Make Large Purchases
One of the biggest mistakes you can make after accepting an offer is making large purchases, especially on credit. This includes buying new furniture, appliances, or even a car. Lenders will re-check your credit before the closing date, and any significant changes to your credit profile can raise red flags. Keep your spending minimal and avoid any large transactions until after the sale is finalized.
2. Don’t Change Jobs or Income Sources
Stability is key when it comes to securing financing. Changing jobs or altering your income stream can make some lenders nervous, even if it’s a higher-paying job. Lenders prefer to see stable employment history, and any changes can complicate or delay the closing process. If you’re considering a job change, it’s best to wait until after your home sale is complete.
3. Don’t Open New Lines of Credit
Opening new lines of credit can affect your credit score and debt-to-income ratio, which are critical factors in securing your mortgage. This means avoiding new credit cards, personal loans, or financing offers. Every new credit inquiry can potentially lower your credit score, and new debt can increase your debt-to-income ratio, both of which can negatively impact your financing approval.
4. Don’t Close Existing Credit Accounts
While opening new accounts is a no-no, closing existing ones isn’t advisable either. Closing credit accounts can affect your credit utilization ratio, which is the amount of credit you’re using relative to your available credit. A lower credit utilization ratio is better for your credit score. Unless directed by your financial advisor or mortgage lender, keep your accounts open and maintain your current credit profile until after your home sale closes.
5. Don’t Miss Any Payments
Missing payments on your current mortgage, credit cards, or any other bills can severely impact your credit score and raise concerns with your lender. Continue to make all your payments on time to maintain a strong credit profile and avoid any complications with your financing.
6. Don’t Ignore Lender Requests
Your lender may require additional documentation or information during the closing process. It’s crucial to respond promptly and accurately to any requests they make. Delaying or ignoring these requests can slow down the process and potentially jeopardize your financing. Stay in close communication with your lender and provide any needed information as quickly as possible.
7. Don’t Make Unexplained Large Deposits
Lenders are wary of large, unexplained deposits in your bank account. These can indicate potential new debts or financial instability. If you receive a large sum of money, be prepared to explain its origin and ensure it’s well-documented. If it’s a gift, you will need to provide documentation that it is not a loan and doesn’t need to be repaid. Transparency is crucial to avoid any issues with your lender.
Buying a home and navigating the closing process can be complex, but avoiding these common pitfalls will help ensure a smooth transition and no hiccups with your financing for the new home. By maintaining your financial stability and credit profile, and responding promptly to your lender, you can avoid jeopardizing your financing and look forward to a successful purchase. Remember, patience and diligence during this critical period can make all the difference in closing your home purchase without any hitches.
If you’re considering making a move in the future, or purchasing a home in the area, let’s chat! You can reach me at 519-824-9050 ext. 235, email me, or connect with me on social media. Let’s get started on turning your dreams into an address!
Happy house hunting!
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Home Buyer Series – What not to do after an Offer
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