5 Things Not to Do Under Contract

It does not matter if you can afford buying a new car or buying new furniture. Do not do it until you are closed on your home. The lender and underwriter are observing your finances, and you don’t want to alter your credit score or the ability to obtain a loan.

Your Lender will be mad. Your Realtor will be mad. The Seller will be mad.

1. Don’t Forget to Pay a Bill
I tell all of my clients to maintain the same financial habits. That means continue paying your bills as usual. If you forget to pay a bill it might ding your credit and alert the lender.

Don’t forget to pay your car payment
Don’t forget to pay your student loan bill
Don’t forget to pay your mortgage 
Don't forget to pay your child support
Don't forget to pay your cell phone bill
Don't forget to pay your cable bill
Don't forget to pay your utility bill

2. Don’t Open Up or Close a Credit Card
It’s tempting to buy all new furniture for your new house. Many stores will offer a discount if you open up a credit card with them. This will affect your credit and alert the lender. Also, don’t change banks. If you are making any changes, please let your lender know before you do. The lender may or may not have given you a list of Do’s and Don’ts, so check with them first.

3. Don’t Rack Up Debt
Try not to add on more debt to your credit cards. Your loan will be going through underwriting, which means most of your financial actions are being observed. Don’t go by all new furniture. Don’t go by a new car. Wait until you close to celebrate.

4. Don’t Pay Off Your Credit Cards
(Unless your lender says it’s ok) The lender and underwriter are watching your financial behavior. They will want to know where you are getting large sums of money to pay off your credit cards. Pretend it was your birthday and you were given $1,000 cash. Whoever gave that to you would need to write a gift letter stating that it was gifted to you. Lenders need a money trail, so they will question where some deposits are coming from.

5. Don’t quit your job
This may sound obvious, but you need a job to obtain a loan. The bank needs to know that you have income coming in, in order to pay your mortgage. As soon as you close on your house, you can quit your job. Although, hopefully you have a way to pay your mortgage. If you quit your job 5 days before closing, you could risk losing the loan and the house and probably earnest money.

Your lender and/or your Realtor should advise you not to do many of these things, especially if you're a first time homebuyer. But it's easy to forget what people tell you or not read what you're signing. It's always best to ask before you do, until you close on your home.