Quick Answer: What To Avoid Before Closing on a House?
Before closing on a house, avoid opening new credit accounts, financing major purchases, missing payments, increasing credit card balances, moving large amounts of money without documentation, or changing jobs without speaking with your lender. Respond promptly if your lender requests updated financial documents, and ask before making a significant financial decision.
Quick Navigation
- Why the Time Before Closing Matters
- Mistake 1: Opening New Credit Accounts
- Mistake 2: Financing Major Purchases
- Mistake 3: Moving Money Without Documentation
- Mistake 4: Missing Payments or Increasing Debt
- Mistake 5: Changing Jobs or Income Sources
- Mistake 6: Delaying Requested Documents
- What to Do Before Closing
- When to Contact Your Mortgage Lender
- Frequently Asked Questions
Why the Time Before Closing Matters
Many first-time buyers are surprised when their lender requests additional documents after the mortgage process has already kicked off.
If your income, employment, credit, debt, or available funds change, your lender may need to evaluate the new information before the loan can move forward.
The best approach is to keep your finances as consistent as possible and speak with your lender before making a significant change.
Related Reading: Modular Home Cost in Wisconsin: Budgeting From Land to Move-In
Mistake #1: Opening New Credit Accounts
You may see offers for zero-percent furniture financing or a discount for opening a store credit card. Although those offers can be tempting, it’s generally best to wait until after your home purchase is complete.
The reason why is because applying for new credit may result in a hard inquiry on your credit report. A new account can also change your monthly debt obligations and cause your lender to review your financial information again.
Even if the account doesn’t prevent final approval, it could lead to additional questions, documentation, or delays.
Before opening a credit card or applying for financing, ask your lender whether it could affect your mortgage.
Mistake #2: Financing Major Purchases Before Closing
Buying a home often comes with a list of things you will eventually need. You may already be shopping for appliances, furniture, lawn equipment, or even a different vehicle.
The safest approach is usually to wait until after closing before financing those purchases.
A new monthly payment can affect your debt-to-income ratio, which compares your monthly debt obligations with your gross monthly income. Lenders may use this ratio when evaluating your mortgage application.
It’s easy to think, “It’s only one small payment.” But even a relatively small payment could change the financial information used to evaluate your mortgage.
Check with your lender before signing up for store financing, a personal loan, or another monthly payment.
Mistake #3: Moving Money Between Accounts Without Documentation
Bank-account activity is one of the common sources of confusion for first-time homebuyers.
You may need to move money between accounts, receive financial help from family, or set aside funds for closing and moving expenses. These transactions may be completely normal, but your lender could ask for documents showing where the money came from.
Lenders typically need to verify the source of funds used for a down payment and closing costs. You may need supporting records for:
- A financial gift from a family member
- A transfer from a savings or investment account
- Proceeds from selling a vehicle or another asset
- A large cash deposit
- Funds moved between different financial institutions
Depending on the transaction, your lender may request account statements, transaction histories, a gift letter, or proof of sale.
Ask what documentation will be needed before making a large transfer or deposit.
Mistake #4: Missing Payments or Increasing Debt
Once an offer is accepted, some buyers assume everything is final. It’s important to keep in mind that late payments, rising credit card balances, and new debt can affect your credit during the final stages of the mortgage process.
Before closing:
- Make your bills and loan payments on time
- Avoid significantly increasing credit card balances
- Do not close existing credit accounts without speaking with your lender
- Check that automatic payments have processed correctly
- Tell your lender if an unexpected financial issue occurs
Your goal here is to maintain the financial habits and credit profile that helped you qualify. If you really need to make a significant change, then check with your lender about how it could affect your mortgage.
Mistake #5: Changing Jobs or Income Sources
Career opportunities don’t always arrive on a convenient timeline. You may receive a promotion, accept a new job, change employers, reduce your hours, or decide to become self-employed while buying a home.
An employment change may affect how your income is evaluated. Your lender could need an offer letter, updated pay stubs, employment verification, or other documents.
Changes in how you are paid may also matter, including moving from:
- Hourly pay to salary
- Salary to commission
- Employee income to self-employment income
- Full-time to part-time work
- Guaranteed hours to variable hours
If your employment, hours, or type of income may change before closing, tell your lender as soon as possible. They can explain whether the change could affect your application or require additional documentation.
Mistake #6: Waiting Too Long to Submit Requested Documents
By the time you get to the end of the homebuying process, you’re probably tired of gathering bank statements, tax returns, pay stubs, and other paperwork. However, waiting too long to provide the requested documents can lead to avoidable delays.
Your lender may need you to provide updated information to verify your income, assets, debts, employment, or source of funds.
When you receive a request:
- Review it as soon as possible
- Ask questions if you don’t understand what’s needed
- Provide complete statements rather than cropped screenshots or partial pages, when requested
- Make sure required names, dates, account details, and transactions are visible
- Use the lender’s approved secure method to submit sensitive information
If you’re unsure what to provide, ask. We would rather clarify the request than have incomplete paperwork delay the process.
What to Do Before Closing on Your First Home
Keep your finances steady and stay in contact with your lender during the weeks leading up to your closing.
Use this checklist as a quick reminder:
- Make all payments on time
- Avoid opening new credit accounts or taking on new debt
- Wait until after closing to finance major purchases
- Keep your down payment and closing funds easy to document
- Respond promptly to document requests
- Tell your lender about changes to your job, income, hours, or financial situation
- Ask before moving a large amount of money or accepting gift funds
It’s also important to review your expected closing costs and confirm how much money you’ll need to bring to closing.
For more help getting ready, download our free First-Time Homebuyer Guide or use our mortgage calculators to explore potential payments and financing scenarios.
When to Contact Your Mortgage Lender
One of the best mortgage tips we can offer is this:don’t assume a change is too small to ask us about.
Contact your lender before closing if you:
- Plan to apply for credit or finance a major purchase
- Expect to receive gift funds or make a large account transfer
- Change jobs, income sources, hours, or compensation
- Experience a financial issue that could affect your payments or available funds
- Have questions about documents or closing costs
A short conversation before making a decision can help you understand whether it could affect your mortgage.
If you’d like guidance specific to your situation, connect with one of our local lenders. AbbyBank’s mortgage options include fixed-rate mortgages, adjustable-rate mortgages, USDA loans, construction loans, land loans, and eligible down payment assistance programs.
Closing With Confidence
By the time closing approaches, you’re probably ready to get the keys and settle into your new home. Remember that your employment, credit, debt, account activity, and supporting documents may still be reviewed before the mortgage receives final approval.
Keep your finances consistent, respond to requests promptly, and ask your lender before making a significant change.
If you're getting ready to buy your first home or you're already under contract, our local mortgage lenders are ready to answer your questions and explain what to expect next.
All loans are subject to credit approval.
Frequently Asked Questions
Can my mortgage be denied before closing?
Yes. A mortgage can be delayed or denied before closing if a significant change affects the borrower’s credit, debt, income, employment, assets, or required documentation. Requirements vary, so contact your lender promptly if your financial situation changes.
Should I buy furniture before closing?
It’s generally best to wait until after closing, especially if you plan to finance the furniture. A new monthly payment could affect your debt-to-income ratio and require additional review.
Can I open a new credit card before closing?
It’s usually safer to wait until after closing. Applying for a credit card may result in a hard inquiry, and a new account or balance could affect the financial information used to evaluate your mortgage.
Why does my lender keep asking for documents?
Your lender may need updated documents to verify your income, employment, assets, debts, or source of funds. These requests are a normal part of the mortgage process, especially as closing approaches.
Can changing jobs affect mortgage approval?
Yes. A job change can affect how your income is evaluated and may require additional documentation. Tell your lender before changing employers, becoming self-employed, reducing your hours, or moving to a different type of compensation.
