Escrow is the stretch between an accepted offer and the keys. It usually runs about thirty to forty-five days, and it is where more deals fall apart than at any other point in a transaction. Almost none of that is bad luck. Most of it comes from a handful of avoidable moves people make without realizing the loan is still being underwritten right up to the day it funds.
Here is what to avoid, and why each one matters.
Michael Marchena on three of the most common mistakes people make when applying for a home loan.
1. Do not open new credit
A new card, a store account opened for a discount at the register, a line of credit for the furniture you are already picturing in the living room. Any of these adds a hard inquiry and a new obligation, and your lender will pull credit again before closing. A new account can change your debt-to-income ratio and your score enough to alter the loan terms you were approved for, or to stop the approval outright.
Wait until after you have the keys. The furniture will still be there.
2. Do not finance a large purchase
Cars are the classic one. So are appliances, a boat, a trailer, and anything else with a monthly payment attached. A new payment reduces the mortgage payment you qualify for, and it is the fastest way to turn a comfortable approval into a denial in the final week.
Paying cash is not automatically safe either, because draining your accounts can leave you short of the reserves the loan requires. Talk to your lender before you spend a significant amount either way.
3. Do not change jobs or how you are paid without telling your lender
Lenders verify employment again shortly before closing, sometimes on the day. Changing employers, moving from salaried to self-employed or contract work, cutting back your hours, or shifting a large share of your pay into commission or bonus all change how your income is documented.
A job change is not automatically fatal, and a lateral move in the same field with the same pay structure is often fine. What causes problems is the lender finding out on their own. If a change is coming, say so early so it can be planned around.
4. Do not move money around without a paper trail
Underwriters have to source your funds. Large deposits that appear without explanation, cash you paid into an account, transfers between accounts, or money gifted by a family member all need documentation. A gift generally needs a signed gift letter and proof of where it came from.
The simplest rule during escrow: leave your accounts alone, and if you must move funds, keep every statement and receipt. Guessing at an explanation weeks later is far harder than documenting it as it happens.
5. Do not miss lender or document deadlines
Your lender will ask for updated pay stubs, bank statements, tax documents and signatures, often on short notice. These requests are not busywork; underwriting stalls until each one is satisfied, and a stalled file is how a closing date slips.
Answer the same day when you can. If you are travelling or hard to reach during escrow, tell everyone in advance so the timeline can account for it.
6. Do not make other major financial changes
Closing old credit cards, paying off a collection without guidance, disputing items on your credit report, co-signing a loan for someone else, or making a large charitable or family gift can all move the numbers underwriting is relying on. Some of these feel responsible and still cause a problem in the middle of a loan file.
If it involves your credit, your income or your savings, run it past your lender first. It is one short conversation.
7. Do not let inspection, appraisal or contingency deadlines slide
A purchase contract runs on dates. Inspection, appraisal, loan and other contingencies each have a deadline, and letting one pass without acting can cost you rights you were counting on, including in some cases your ability to walk away with your deposit intact.
Schedule inspections as soon as escrow opens rather than at the end of the window, read the reports promptly, and raise any request for repairs or credits inside the timeframe. If the appraisal comes in below the contract price, that is a negotiation, not a dead end, but it is one that has to happen on schedule.
8. Do not assume loan approval is final until it funds
Approval is conditional almost the whole way through. Credit is re-checked, employment is re-verified, and the file is reviewed again before documents are drawn. Treat every day of escrow as if the loan is still being decided, because it is.
The same caution applies to the final walkthrough. Confirm agreed repairs were completed and that the home is in the condition you agreed to buy, before you sign, not after.
If you are the seller, most of this applies to you too
A seller who is buying another home is in exactly the same position on the purchase side, so every point above applies to that loan. Beyond that, sellers have their own short list: keep utilities on so inspections and the appraisal can be completed, do not start work on the home that was not agreed to in the contract, complete agreed repairs with receipts, and keep the property accessible and in the condition it was in when the offer was accepted. Leaving it clean and empty of everything not included in the sale avoids an awkward conversation on walkthrough day.
The short version
Between accepted offer and closing, keep your financial life boring. No new credit, no new payments, no unexplained deposits, no surprises for your lender, and nothing missed on the calendar. Ask before you act, and escrow tends to be uneventful, which is exactly what you want it to be.
Questions during escrow?
We handle real estate and home loans together, so if something comes up mid-escrow you are asking one team rather than trying to relay a question between two. Get in touch and we will tell you straight whether it is a problem.
More buyer reading: our step-by-step home buying guide, first-time buyer mistakes to avoid, and is now the right time for you to buy.
