Your home loan - How to Avoid a Disaster at Closing

You’ve applied, and have been approved for, a home loan. You spend several weeks or months searching for the perfect property with your real estate agent. After your offer is accepted, you anxiously anticipate closing day. Your belongings are packed and you’re ready to move into your new home.

Then, right before closing, your loan officer informs you there’s a problem. The lender pulled another credit report, and it doesn’t look good. You might not be buying that house after all.

Related: 10 Things not to do while you home loan is in process

This type of devastating situation does indeed happen, but luckily it can be prevented.

Many lenders are required to pull a new credit report at closing to determine if there are any new credit obligations. For example, if your first report included excessive credit inquiries, another report may be necessary to verify you have not over-extended your credit in the meantime. This second report is usually requested between one and three days before closing day.

Related: Changes on the way for FHA loans

If your credit score has dropped, debt-to-income ratio has changed, or you have applied for any new accounts, you could be immediately disqualified for the mortgage.

For this reason, you should remember these simple rules: From the time that you are approved for a home loan until after closing has been completed, do not apply for any new credit accounts, make large purchases using existing lines of credit, or miss any scheduled payments.

Related: Will it be cheaper to own a home than rent one in 2014?

Treat your new mortgage as top priority, and postpone all other purchases until after the loan is closed. As long as your credit report does not change, you shouldn’t have to worry about a last-minute disaster.

We have helped countless home buyers navigate their way to a successful closing, they have two things in common. They contacted us and now they’re homeowners.

Contact a home loan specialist

Some of this information has been provided by the folks at Dedicated Credit Repair