Getting pre-approved for a mortgage can feel like a major victory, and it is. But the time between pre-approval and closing is just as important. During this period, lenders will keep a close eye on your financial health. Any major changes could affect your final loan terms or even risk your mortgage approval. Here are some simple tips to help you stay on track.
1. Avoid Large Purchases
It may be tempting to buy new furniture or a new car, especially if you are planning to move soon. However, large purchases can hurt your credit score and raise your debt-to-income ratio. This might send a red flag to your lender. If possible, hold off on big buys until after you have the keys to your new home in hand.
2. Keep an Eye on Your Credit
Your credit report can change if you open or close credit accounts. Even paying off a debt in full could shift your credit score in unexpected ways. To be safe, try to maintain your existing credit habits. Continue paying bills on time and avoid any sudden credit inquiries. If you need to make changes, check with your lender first so you understand how it might affect your mortgage.
3. Save More Than Expected
Closing costs and moving expenses can creep up on you. Saving a little extra can help you cover these surprises without dipping into emergency funds. Setting aside money each paycheck for those “just in case” moments can reduce stress as closing day nears.
4. Document Your Finances
Lenders can ask for additional proof of income, bank statements, or other documents. Be prepared to share updated details about your financial status. The faster you can provide these, the smoother your path to closing. Keeping all your paperwork in one place can save time and headaches.
5. Stay in Touch with Your Lender
The mortgage process involves a lot of moving parts, and communication is key. If something in your life changes like a new job or a bonus, let your lender know. They can guide you on how to handle these changes without risking your home purchase.
Managing your finances between pre-approval and closing is all about consistency and caution. Large purchases and sudden changes to your credit can put your mortgage at risk. By sticking to a stable financial plan, saving more than you think you will need and keeping your lender informed, you can make the closing process smoother. These steps not only help you secure the home of your dreams but also set you up for smart money habits long after you have moved in.
