9 Mistakes to Avoid Before Your Loan Closing

Closing on a loan is a major milestone, but there are several potential pitfalls that can jeopardize the process if you're not careful. Here are nine things you should avoid doing before you reach the finish line:

1. Don’t Make a Large Dollar Purchase

It’s tempting to start shopping for new furniture, appliances, or a car once you’ve been approved, but hold off until after your loan closes. Big purchases can alter your debt-to-income ratio, which may affect your loan terms or even result in denial.

2. Don’t Quit or Switch Your Job

Your employment and income play a key role in your loan approval. Any sudden job changes can cause your lender to rethink your application. Stay put in your current job until after the closing to avoid any complications.

3. Don’t Open or Close Lines of Credit

Opening or closing credit accounts can change your credit score. Even a minor fluctuation in your score could impact your loan terms. Keep your credit profile stable until your loan is finalized.

4. Don’t Pay Bills Late

Late payments can have a serious impact on your credit score, and lenders often perform a final credit check before closing. Keep paying all your bills on time to maintain your credit standing.

5. Don’t Ignore Questions from Your Lender

Communication is key to a smooth loan closing. If your lender requests additional information or clarification, respond promptly. Ignoring their questions can cause unnecessary delays or concerns.

6. Don’t Let Someone Run a Credit Check on You

Additional credit inquiries can raise red flags for your lender, as they may indicate you’re planning to take on new debt. Avoid applying for any new credit or letting anyone check your credit until the loan is closed.

7. Don’t Make Large Deposits Into Your Accounts

Large, unexplained deposits can trigger concerns during the underwriting process. Lenders are wary of sudden changes in your finances. If you need to make a significant deposit, be prepared to explain its source.

8. Don’t Change Bank Accounts

Switching banks can complicate the underwriting process and delay closing. Lenders want a clear picture of your financial history, so it’s best to keep your banking consistent until the deal is done.

9. Don’t Take Out or Co-Sign Any New Loans

Taking on new debt or co-signing for someone else’s loan can alter your financial profile and impact your ability to close. Avoid new loans until after your current loan has successfully closed.

Final Thought
The loan closing process requires stability and careful planning. By avoiding these common pitfalls, you’ll be well on your way to a successful and stress-free loan closing. Remember, maintaining financial consistency is key to reaching the finish line without a hitch!