WWBT

Mortgage Answers / Before Closing

Should I Avoid New Debt Before Closing on a House?

The Short Answer

New credit applications, borrowing or larger debt payments can affect your mortgage review. Talk with your lender before making major financial changes, and disclose changes promptly. Approval before closing is not a reason to ignore new obligations.

Check a planned purchase, new account or payoff before relying on earlier loan numbers.

Explore Your Options
BEFORE CLOSING?

A new payment can change the review.

A finished decision
Disclose changes before closing.

Start with your priority

Which financial change are you considering?

Explore a goal below. No contact information needed.

I am considering a purchase

Financing a purchase can add a payment or change the review. Ask before taking on the obligation, even after an earlier approval.

  1. Ask before financing it

    Ask the lender before applying for new financing or making a major financial change.

  2. Review the effect on debt and savings

    Discuss the possible payment and effect on the cash you need for the home. Do not assume a store offer has no mortgage impact.

  3. Confirm the mortgage impact

    Confirm what the lender needs to review before you commit. This page cannot predict the loan decision.

Discuss this next step with Troy

I already opened credit

Tell the lender promptly. Do not assume a new account or payment will be ignored because closing is close.

  1. Tell the lender

    Tell the lender about the new credit account or obligation as soon as possible.

  2. Provide requested account information

    Provide the requested account, balance and payment information. Do not leave the change out because it is recent.

  3. Ask whether updated review is needed

    Ask whether the application and closing plans need an updated review. An earlier approval is not a reason to hide a new debt.

Discuss this next step with Troy

I want to pay off debt

Using savings to pay off debt can also affect closing cash. Ask how the lender would treat the change before moving money.

  1. Discuss the plan before moving savings

    Discuss the planned payoff before using savings. Ask how it would be treated in the loan review.

  2. Check closing cash and reserves

    Check the money still needed at closing and any savings the lender requires you to keep, called reserves.

  3. Confirm how the lender treats the payoff

    Confirm what records or updated review would be needed. Do not assume paying debt is always the best step for this purchase.

Discuss this next step with Troy

More than one path

Keep these two things in view.

Tap a card to see what matters.

The practical resultPlanA new payment can change the review.Details

New credit applications, borrowing or larger debt payments can affect your mortgage review. Talk with your lender before making major financial changes, and disclose changes promptly. Approval before closing is not a reason to ignore new obligations.

The important limitRuleDisclose changes before closing.Details

The loan program, lender, property and complete application can affect what happens next. This is educational guidance, not a loan approval or promise.

What does this connect to?

A mortgage lender may count a student loan payment different from your current bill. Ask which program rules and documents apply.

What could affect the next step?

Business sales are not automatically the personal income counted for a home loan. Ask which records support the income and how business changes are reviewed.

What should I check next?

An earlier letter does not finish the loan or property review. Track the next steps, answer requests and keep the lender informed of changes.

A few good questions

Can a new credit account affect the mortgage after an earlier approval?

Yes, it can lead to a new review of debts, income or other loan conditions. Tell the lender promptly.

Should I hide a small new payment because closing is soon?

No. Disclose new obligations and provide the requested records. The lender decides how they affect the review.

Is paying off debt always the best use of savings before closing?

Not necessarily. You may still need money at closing and required savings after closing. Discuss the plan with the lender first.

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Fayetteville, NC

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We were blown away by how fast and seamless our closing process was with Troy. He locked in a great rate quickly and handled every detail so we could move into our home on schedule!

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Show Low, AZ

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Boulder, CO

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About WWBT & Disclosures
Why Wait Buy Today, WWBT provides educational tools and interactive experiences designed to help consumers explore homebuying, financing, and homeownership options. Information provided through WWBT is for educational purposes and is not a commitment to lend or provide real estate services. Mortgage, real estate, builder, and other professional services are provided by the professional or company identified on the applicable experience. Participating professionals are responsible for their own licensing, disclosures, advertising, products, rates, terms, eligibility requirements, and services.