Things Not to Do Before a Real Estate Closing

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There are two ways to learn the things that a homebuyer should not do before closing a real estate sale: the easy way and the hard way. Unfortunately, many people learn the hard way, but listening to the advice from your mortgage broker and your real estate agent can help you learn the easy way.

Whether it's from a temporary lapse in judgment or from the stress of closing the sale of their new home, sometimes buyers make mistakes that end up delaying their closing. Learn more about which mistakes to avoid.

Key Takeaways

  • If you have a freeze on your credit, ask for it to be lifted rather than canceled. 
  • Correct errors on your credit report before you start the homebuying process, not while you’re under contract.
  • Don’t apply for new credit or open new credit accounts while you’re under contract.

Be Careful of Your Actions

Mortgage rules and guidelines don't necessarily make a lot of common sense—except to the government committee that created the regulations.

For example, a homebuyer with a freeze on their credit report might be asked by the lender to temporarily lift that freeze. What the home buyer hears is something different: to cancel the credit freeze. If the buyer cancels the freeze, it could cause a new credit report to be generated that could produce a lower FICO score. In that event, a new closing disclosure would need to be drawn to reflect the higher mortgage interest rate. A quarter-point jump from 4% to 4.25% on a $300,000 loan results in paying more than $15,000 more over the term of a 30-year loan.

Generating a new closing disclosure under TRID guidelines means that the buyer will need to wait through another time period before loan docs can be drawn. Waiting for a second time period can delay your closing.

Don't Try to Correct Your Credit Report

Some borrowers—upon checking credit reports—find an item that is incorrect. The time to try to correct a problem is before you are under contract to buy a home, not during the contract period. Disputing an error while under contract to buy a home can trigger another credit report, which could generate a new closing disclosure.

Things You Shouldn't Do When Waiting to Close a Real Estate Sale

  • Do not touch your credit report: Don't even look at it. You could make a harmless inquiry and end up delaying your closing. If you have any problems with your credit report, wait to address them until the home buying process is complete.
  • Do not establish new credit: Have cash-back cards been offered to you out of the blue? Delete those emails, shred the reply forms, or wait until after your transaction has closed to accept new credit.
  • Do not close any credit accounts: Even if you realize that you never use a certain credit card, for example, feel free to cut it up, but don't cancel that line of credit while you are waiting to close the purchase of your home.
  • Do not increase the credit limits on your cards: Anything that is worth buying with a credit card is worth waiting for. If you get an offer in the mail, don't respond to it.
  • Do not buy anything with a credit card or put an item on layaway: This is extremely important, and it will probably be difficult—but it's worth the effort. Yes, you may need a washer and dryer, as well as other furniture and appliances, but wait until you close to order anything. Even if a salesperson says they'll write it up and hold it for you, there's a chance it could be entered into the computer by mistake, which could delay your closing. It's best not to take the chance.

Frequently Asked Questions (FAQs)

Will my lender pull my credit report on the day of closing?

Not usually, but your lender could check your credit report one final time before giving final approval, which could be three days before closing. It's important not to open any credit accounts or change anything on your credit report until after you have closed escrow.

Can I accept a new job offer while I'm in escrow for a home?

Changing jobs mid-escrow can delay or derail your closing and will trigger a whole new round of documentation. While you can give a verbal acceptance of a job offer during that time, you should try not to change jobs until you've closed escrow and the home is yours. If you have no other choice but to start a new job, you can discuss it with your lender, and they can help you decide the best way to keep the deal going while you switch to a new job.

Is it O.K. for me to co-sign a loan for someone else while I'm buying a house?

Even if you won't be the one making the payments on a co-signed loan, you should still avoid co-signing a loan during your homebuying process. Your lender will consider the loan as your debt, regardless of who will be making the payments. That could throw off your debt-to-income ratio, which could derail your home purchase.

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