What Not to Do When Waiting to Close on Your House

Congrats on finding the perfect new home! The marathon house hunting afternoons are over and the tedious paperwork details have now been handed off to your trusted realtor and mortgage lender. This is a great time to kick back and think about new towels and paint colors, right?

Not so fast.

You’re not a homeowner until your closing date (also known as mortgage closing) has come and gone without incident and those front door keys are in your hand. Remember the nerve-wracking days spent figuring out how to secure the pre-approval for your mortgage? You are still in that same kind of financial purgatory. The next goal should be to make sure you are ready for closing.

It probably seems like the home buying process drags on and on. Thankfully, closing is the very last step and is the process through which you become the legal owner of a house. Expect to sign lots of papers, process lots of information and maybe even hand over some money.

Consider these tips that can help you be ready for the big day:

Talk to your lender or closing agent about closing costs; you don’t want surprise fees to crop up on closing day. In addition, be prepared to possibly shell out money around this time for homeowners association dues and maybe to hire someone to change the locks on your new home.

Make sure you are covered when it comes to insurance. As a buyer, you will need to show proof of homeowners insurance to the mortgage lender. Sometimes the lender will also require private mortgage insurance (PMI), which is a type of mortgage insurance typically required if you make a down payment of 20 percent or less.

Understand escrow. Many first-time homebuyers may have heard this word, but are unsure what it really means. In the case of buying a home, an escrow account usually refers to the lender’s offer to keep a homeowner’s property tax and/or insurance funds in a separate account so that the lender can make those payments for the homeowner.

Unfortunately, some home buyers inadvertently commit financial missteps that negatively affect a closing date. Translation: they screw up. On a perfectly related note, have you ever heard that sometimes a person’s purpose in life is to serve as a warning to others? Please don’t be that person.

Here’s a list of what NOT to do when waiting to close on your home:

Don’t finance anything. Do you have your eye on a new car? Maybe a motorcycle? Wait until after closing because your closing date may get delayed if you apply for new credit during this time.

Resist the urge to open a new department store credit card, even if the salesperson assures you that the “save 10 percent on your purchase right now” is the deal of a lifetime. Again, applying for new credit could spell disaster for that new house deal you’re hoping to pull off in the near future.

Try not to get fired. Or change jobs for any other reason. Your lender will have to re-figure everything, and probably won’t be very happy.

Don’t be a show-off. Adding more money to your down payment may sound like a good idea, but at this point in the game it can be cause for a closing date delay.

“Buyers can jeopardize their closing by making last minute changes,” said Heather Goodwin, Closing Agent at Columbia Title in Lafayette, Indiana. “Any change, even if it’s a ‘good’ change, will trigger a need for a re-disclosure of all terms and figures. Most of the time, that re-disclosure will halt the closing for a full three days,” she added.

Missing your closing date is a big deal because it means you’ll be delayed in taking possession of your new home. Communicate with your lender and research all the ways in which to be prepared for this important home buying process.

And don’t buy a motorcycle; stick to the inexpensive towels and paint.

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