What Not to Do Before Closing on a House

Your offer was accepted, your mortgage is moving forward, and now you are waiting for closing. At this point, it is very easy to feel like the financial part is basically finished.

It is not.

Until your mortgage has actually closed, changes to your income, debts, credit, or available funds can potentially affect the loan. That does not mean you need to freeze your entire life for a month, but there are a few decisions I would absolutely talk through with your loan officer before making them.

The simplest rule is this: if it involves borrowing money, moving a significant amount of money, or changing how you earn money, ask first.

Be Careful About Taking on New Debt

You finally know which house you are buying, so naturally you start thinking about everything you want to put inside it. Maybe the furniture store is offering zero-percent financing. Maybe you need a new refrigerator. Maybe your truck is on its last leg and the dealership has exactly what you want.

Wait.

New financing can create a new monthly obligation, and that can affect the financial information your mortgage approval was based on. Even a purchase that seems completely manageable to you may change the numbers the lender has to consider.

This applies to vehicles, furniture financing, credit cards, personal loans, buy-now-pay-later accounts, and other forms of new debt.

You will have plenty of time to buy a couch after the house actually belongs to you.

Do Not Start Moving Money Around Without Keeping a Paper Trail

Mortgage lenders need to document the funds being used in the transaction, and unexplained large deposits or transfers can create questions that need to be resolved.

That does not mean you are forbidden from moving your own money.

It means you should talk with your loan officer before making unusual transfers or depositing a significant amount of cash so you understand what documentation may be needed.

This becomes especially important if someone is helping you with the purchase. Gift funds may be permitted in certain mortgage situations, but there are rules and documentation requirements surrounding how those funds are handled.

Do not invent your own elaborate system for moving the money through four different accounts because it seems easier.

Ask first. Your future self, who would otherwise be hunting through bank statements two days before closing, will appreciate it.

Be Cautious About Changing Jobs

People change jobs all the time, and a job change does not automatically destroy a mortgage application.

It can, however, affect how your income is evaluated.

If you are considering changing employers, changing from salaried to self-employed work, reducing hours, switching compensation structures, or making another significant employment change before closing, talk with your lender before you make the move.

The same goes for quitting a job.

Even if you have another source of income or believe the change will improve your finances, the lender needs to determine how that income can be treated under the applicable loan requirements.

Do Not Ignore Your Existing Bills

It can be easy to become so focused on saving cash for closing that something ordinary gets overlooked.

Keep making your existing payments on time.

A late payment during the mortgage process is not something you want appearing unexpectedly, particularly if your credit is reviewed again before closing.

You should also avoid closing credit accounts or making other major changes to your credit profile simply because you think “cleaning things up” will help.

Credit can be unintuitive. A well-intentioned change does not always produce the result someone expects.

If you are thinking about doing something specifically to improve your mortgage qualification, let your lender look at the situation first.

Do Not Assume You Are Finished Until You Are Actually Finished

A pre-approval is not the end of the mortgage process, and even final stages of the loan can involve updated verification.

Your lender may need newer bank statements, employment verification, updated documentation, or clarification about something that has changed since the application began.

That is normal.

The safest approach is simply to keep your financial life relatively boring until closing. Continue working, pay your bills, avoid unnecessary new debt, keep your funds documented, and communicate with your loan officer when something changes.

And if you are standing in a dealership three weeks before closing wondering whether financing the new SUV could affect your mortgage, that is probably a good time to put the pen down and make a phone call.

Tony Daniels works with home buyers throughout Washington, Montana, and South Dakota from pre-approval through closing. If something changes while your mortgage is in process, communicating early gives your lender a chance to understand the situation before it becomes a last-minute surprise.

Changes to credit, debt, employment, income, assets, or other financial circumstances may affect mortgage qualification. Always discuss significant financial changes with your lender while your loan is in process.