What Not to Do Once You are In Contract
Once you've found the perfect home and gone through the process of making an offer and getting it accepted, the next step is to enter into a contract. This is a legally binding agreement that outlines the terms and conditions of the sale. While it may seem like the hard part is over, there are still some important things to keep in mind. In this blog, we'll discuss what not to do once you are in contract.
First and foremost, it's important to remember that your mortgage application is still being processed. This means that any changes to your financial situation can have a significant impact on your ability to secure the loan. As such, it's imperative that you do not switch jobs, apply for new credit or use credit, and do not by a car once you are in contract. Doing so can cause delays, or even cause the lender to deny your application altogether.
One of the main factors that lenders consider when approving a mortgage is your debt-to-income ratio. This is the ratio of your monthly debt payments, including your mortgage, to your monthly income. If you take on new debt, such as a car loan or credit card, it can throw off this ratio and make it more difficult to qualify for the loan. Similarly, if you close a line of credit that you've had for a long time, it can negatively impact your credit score, which can also affect your ability to get approved for the loan.
It's also important to keep in mind that the lender will likely verify your employment and income shortly before closing. If you switch jobs or become unemployed, it can cause the lender to delay or even cancel the loan. This is because they need to ensure that you have a stable source of income and can make the mortgage payments.
In short, once you are in contract, it's crucial that you maintain the status quo when it comes to your financial situation. Avoid taking on new debt, closing lines of credit, or switching jobs until after the home sale has closed. This will help ensure that your mortgage approval stays on track and the home sale goes smoothly.
