Common Mistakes That May Impact Closing on Your Home Loan

Purchasing a home is an exciting milestone, but it can also be a complex process with many moving parts. Closing on your home loan is a critical step that requires careful attention to detail. Here are some common mistakes to avoid to ensure a smooth closing process.

 

Changing Jobs or Income Levels

Lenders rely on your employment and income stability to determine your ability to repay the loan. Changing jobs or altering your income during the home buying process can raise red flags and potentially jeopardize your loan approval. If possible, try to maintain your current employment status until after closing.

​

Making Large Purchases

It's tempting to buy new furniture or appliances for your home before you move in, but making significant purchases can affect your credit score and debt-to-income ratio. Lenders monitor your financial situation up until closing, so it's best to avoid incurring new debt or making large purchases until after the loan is finalized.

​

Not Responding Promptly to Lender Requests

Throughout the loan process, your lender may require additional documentation or clarification. Failing to respond promptly to these requests can delay the closing process. Stay organized and responsive to ensure that everything moves forward smoothly.

​

Overlooking the Final Walk-Through

The final walk-through is your last chance to ensure that the property is in the agreed-upon condition. Skipping this step can lead to unpleasant surprises after you move in, such as repairs that were not completed. Make sure to thoroughly inspect the property and address any issues with the seller before closing.

​

Neglecting to Review Closing Documents

Reviewing your closing documents in advance is crucial. These documents outline the terms of your loan, the closing costs, and other important details. By thoroughly understanding and verifying the information, you can avoid unexpected costs or terms that might not be favorable.

​

Forgetting to Budget for Closing Costs

Closing costs can add up quickly and include fees for appraisals, inspections, and legal services. Make sure you budget for these expenses early in the home buying process to prevent any financial strain at closing.

​

Not Locking in Your Interest Rate

Interest rates can fluctuate, sometimes significantly, between the time you apply for a loan and when you close. To protect yourself from unexpected increases, consider locking in your interest rate early in the process with your lender.

​

Conclusion

By being aware of and avoiding these common mistakes, you can help ensure a smoother and less stressful closing process on your home loan. Take the time to understand each step, communicate effectively with your lender, and make informed decisions to successfully close on your dream home.

​

Steer clear of new debt that impacts your credit and necessitates your social security number.