Military buyers who have signed a contract, gone through preapproval and passed the VA appraisal are well on their way to a closing day celebration.
But we all know that a lot can change between a signed contract and closing day, especially when it comes to a mortgage. Career changes, a job loss or new debts can pop up at any time, sending a potential loan off the rails.
Buyers should be aware that lenders will conduct a final financial review shortly before closing. Underwriters will be combing through a borrower’s latest records for any major changes that may have occurred and for any incidents that could knock a potential borrower out of VA loan contention.
During the days ahead of closing, buyers need to protect their home purchases by steering clear of the following pitfalls:
1. Major Purchases
One snare to avoid before closing is a major purchase. Lenders want to be assured that a buyer can continually make mortgage payments. Buyers who take on a big debt like a car or a truckload of new furniture might be stretching their budgets beyond a lender’s comfort zone.
Lenders will conduct another credit check before you close, with an eye out for new loans or obligations. They’ll also examine your cash reserves, so beware of big cash purchases, too. Keep your mortgage in good shape by saving those big purchases for the day AFTER you close on your new home.
2. Career Changes
Job loss and new career paths are big red flags for lenders. A mortgage lender wants to make sure that your income is consistent and that a monthly payment is manageable. A sudden job change may put your earnings at risk and a lender on his toes. Avoid sending an undesirable message to your lender by striving to maintain steady employment at this stage.
3. Credit Problems
Try to avoid credit checks and credit slip-ups while you’re waiting for your loan to close. Most lenders will pull your credit report again just before closing, so any new credit dings could sidetrack your purchase.
Don’t make late payments, and try to avoid applying for new credit before finalizing your mortgage. Obtaining a new credit card can instigate a credit score inquiry, which can damage your overall credit score.
When in doubt about how to handle credit during this interim period, check with your lender. Lenders have a wealth of experience in this area, and can provide solid guidance to keep your mortgage on track.
You can also review our contract information guide for additional guidance.