Smooth Sailing to Closing: What Not to Do Once You're Under Contract

Smooth Sailing to Closing: What Not to Do Once You're Under Contract

Buying a home is incredibly exciting, and once your offer is accepted and you're officially "under contract," it feels like you're on the home stretch to getting those keys! However, this crucial period between contract and closing is not the time to relax your guard. As a local real estate professional, I've seen buyers, with the best intentions, make missteps during this phase that can jeopardize their entire purchase.

To ensure a smooth journey to closing, here are some critical "buyer no-no's" to avoid once you're under contract:

Buyer Beware: 7 Things NOT to Do Once You're Under Contract

1. Don't Make Any Major Purchases (especially on Credit!) This is perhaps the biggest and most common mistake. That new car, a fancy furniture set for your new living room, or even just opening new credit cards for appliance discounts can be detrimental.

• Why it's a no-no: Lenders will perform a final credit check and employment verification just before closing. Any new debt, significant purchases, or even just a hard inquiry on your credit report can drastically change your debt-to-income ratio or credit score, potentially disqualifying you for your loan. Even if you're approved, your interest rate could increase.

• What to do instead: Hold off on any large purchases until after you've officially closed on your new home.

2. Don't Change Jobs or Employment Status It might seem like a good idea to switch to that dream job with a higher salary, but during the underwriting process, consistency is key.

• Why it's a no-no: Lenders need stable employment history to approve your loan. A new job, a significant change in pay structure (e.g., from salary to commission), or especially becoming self-employed, can trigger a re-evaluation of your loan and potentially put your approval at risk.

• What to do instead: If a job change is unavoidable, communicate immediately with your lender and Realtor so we can assess the impact and guide you on the best course of action.

3. Don't Co-Sign for Anyone Helping out a friend or family member by co-signing a loan (for a car, a student loan, etc.) seems like a kind gesture.

• Why it's a no-no: When you co-sign, that debt becomes your debt in the eyes of the lender, impacting your debt-to-income ratio just as if you took out the loan yourself. See "Major Purchases" above for why this is dangerous.

• What to do instead: Politely decline any requests to co-sign until after your home purchase is finalized.

4. Don't Transfer Large Sums of Money Without Documentation If you have cash savings you plan to use, moving large amounts between accounts can raise red flags for underwriters.

• Why it's a no-no: Lenders need to "source" all funds. Large, unexplained deposits or transfers can look suspicious and might require extensive documentation, delaying your closing.

• What to do instead: If you need to consolidate funds, talk to your loan officer first. They can advise you on the proper way to do it and what documentation will be needed.

5. Don't Apply for New Credit (of Any Kind!) This includes store credit cards, new lines of credit for appliances, or even furniture financing.

• Why it's a no-no: Every time you apply for credit, it results in a "hard inquiry" on your credit report, which can temporarily lower your credit score. Multiple inquiries can significantly impact your score and affect your lender's confidence.

• What to do instead: Avoid all new credit applications until after closing.

6. Don't Change Bank Accounts While less common, changing banks or closing accounts can create headaches.

• Why it's a no-no: Your lender is tracking your assets, and changing accounts means new statements and new verification processes, which can cause delays.

• What to do instead: Keep your financial life as stable as possible until after closing.

7. Don't Ignore Lender or Realtor Requests This seems obvious, but in the excitement, it's easy to overlook an email or voicemail.

• Why it's a no-no: Your lender and Realtor will likely have follow-up questions or require additional documentation. Delays in providing these can push back your closing date, which can have ripple effects for everyone involved.

• What to do instead: Be responsive! Check your emails and voicemails regularly, and provide any requested information or documents as quickly as possible.

Being under contract is an exciting phase, but it requires diligence. By avoiding these common "no-no's," you'll help ensure that your path to homeownership in Flagler County remains smooth and stress-free. If you ever have a question about a financial decision during this period, don't hesitate to call your lender or me – we're here to guide you to a successful closing!