You’re Under Contract! Now, Don’t Move a Muscle (Financially Speaking)

by Lori Collins

Congratulations! The seller accepted your offer, the inspections are underway, and you can already see where your couch is going to sit in the living room. It’s an incredibly exciting time, but I’m going to give you a piece of advice that sounds counterintuitive: Now is the time to be as boring as possible.

Being "under contract" is like being in a financial waiting room. You have a preliminary "yes" from your lender, but that "yes" is contingent on your financial profile remaining exactly the same until the moment the deed is recorded.

Here is the ultimate guide on what not to do while you’re under contract, and the cautionary tales of what happens if you do.

1. Don't Open New Lines of Credit

It’s tempting to head to a furniture store and take advantage of a "0% interest for 48 months" deal to furnish your new home. Don't do it. Every time you apply for credit, it triggers a "hard inquiry" on your credit report, which can dip your score. More importantly, a new debt obligation changes your Debt-to-Income (DTI) ratio. Lenders use this ratio to determine how much house you can afford. Even if you haven't made a payment yet, that new credit line counts against you.

2. Don’t Make Large Purchases

This goes hand-in-hand with credit, but it applies to cash, too. Buying a new car, a riding lawnmower, or even high-end appliances before you close can be a fatal mistake. Even if you pay cash, you are depleting the reserves that the lender verified during your pre-approval. They want to see that you have enough "cushion" left after your down payment to handle life’s emergencies.

3. Don't Change Jobs (If You Can Help It)

Lenders love stability. They approved you based on your current salary and employment history. If you quit your job to start a business or jump into a completely different field, the lender has to re-verify your income. In some cases, a job change—even one with a higher salary—can require a new 30-day trail of paystubs, which can delay your closing by weeks or kill the deal entirely.

4. Don’t Move Large Sums of Money Around

If your parents are gifting you money for a down payment, or if you’re moving savings from one account to another, talk to your loan officer first. Lenders are required by law to document the "paper trail" of your funds to prevent money laundering. Random deposits of $5,000 without a clear source can trigger a red flag that requires weeks of paperwork to clear up.

5. Don't Co-Sign for Anyone

You might think helping your niece get a car loan is a kind gesture that doesn't affect your home loan. Unfortunately, the bank sees it differently. When you co-sign, you are 100% legally responsible for that debt. It appears on your credit report and is factored into your DTI ratio as if it were your own monthly payment.

What Can Actually Happen? (The "Worst Case" Scenarios)

You might think, "My lender already ran my credit; they won't check again." This is a dangerous misconception. Lenders almost always perform a "soft pull" or a final credit refresh a day or two before closing.

If they find a new debt or a lower score, here is what typically happens:

The Interest Rate Hike: If your credit score dropped because of a new credit card, you might no longer qualify for the low interest rate you were quoted. A 0.5% increase in your rate could cost you tens of thousands of dollars over the life of the loan.
The "Conditional Denial": The lender may demand that you close the new accounts or pay off the debt immediately. However, paying off a debt can also change your cash-on-hand, creating a new problem with your down payment requirements.
The Total Collapse: If the new debt pushes your DTI over the limit, the lender will deny the loan. If you can't get financing, you are in breach of contract. This often means you lose your Earnest Money Deposit—which can be thousands of dollars—and, of course, you lose the house.

The Golden Rule: Ask Before You Act

The period between "Under Contract" and "Closed" usually lasts 30 to 45 days. It feels like forever, but it is the most sensitive part of the process.

Your Mantra: If it involves a signature, a social security number, or more than $500, call your loan officer or me first. We aren't here to ruin your fun; we’re here to make sure you actually get the keys to the front door.

Stay boring, keep your bank statements clean, and save the celebration shopping for the day after you get the keys!

🔑 Your Pre-Closing To-Do List: The Final Countdown

The finish line is in sight! To ensure a smooth closing day with no surprises, make sure you check off these essential items during your final week:

Confirm Closing Details: Re-verify the date, time, and physical location of the closing meeting with your escrow officer or attorney.
Review the Closing Disclosure (CD): You should receive this at least three days before closing. Compare it line-by-line with your original Loan Estimate. If you see a fee you don't recognize, ask about it immediately.
The Final Walk-Through: This usually happens 24 hours before closing. Ensure all agreed-upon repairs were made and that the home is in the same condition as when you made the offer.
Arrange the Funds: Secure a cashier’s check or initiate a wire transfer for the exact "Cash to Close" amount.

Pro Tip: Always call your title company using a trusted phone number to verify wire instructions before sending money.
Gather Your Documents: You will need a valid, government-issued photo ID (like a driver’s license or passport) for every person whose name will be on the title.
Proof of Insurance: Ensure your lender has the final copy of your homeowner’s insurance policy (the "binder") and that the first year is set to be paid at closing.
Transfer Utilities: Schedule the transfer of electricity, water, gas, and trash to your name effective on the day of closing so you aren't left in the dark.
Pack Your Patience: Closing can take anywhere from one to three hours. Bring a snack, a bottle of water, and your favorite signing pen!