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Can Personal Changes After Closing Invalidate Mortgage?

If your personal circumstances change after your mortgage closes can that invalidate the mortgage?

Michael Jensen, Mortgage and Finance Guru
, Mortgage and Finance Guru

As long as you provide accurate, honest and complete information on your mortgage application, changes in your personal circumstances after your loan has closed do not invalidate your mortgage.  You are required to disclose your job, marital status and number of dependents on your application along with other extensive information about your income and assets.  If any of this information changes after your mortgage closes, your loan remains valid and your mortgage terms do not change.

For example, if you unfortunately lose your job a month after your mortgage closes, the lender cannot cancel your loan or change your interest rate or monthly payment.  In fact, the lender is unlikely to learn that you have lost your job unless you communicate this information directly to the lender.

As a comparison, if you lost your job in between the time you submitted your application and your scheduled closing date, your mortgage may have been declined.  But as long as the change in your circumstances happens after your mortgage closed, you are in the clear as long as you continue to make your monthly payments.

Another example is if you are transferred for work after your loan closes.  In this scenario you may want to move out and rent your home, in which case the property is no longer your primary residence as indicated on your loan application.

Assuming that you were unaware that you were being relocated for your job and you fully intended to live in the property when you filled out your application, then this should not cause an issue.  Again, it is important that you continue paying your mortgage in which case the lender may not realize that you have changed locations.

The final example we want to review is if your family situation changes such as if you get married or have a child after your mortgage closes.  Some loan programs, such as the USDA home loan program and other low down payment programs, apply applicant income limits.

In short, if the members of your household earn too much money, you may be ineligible for the program.  So if you apply for the mortgage as a single applicant you may be below the income limit and qualify for the program as compared to applying with a spouse whose extra income may put you over the limit and disqualify you.

If your marital status or the size of your family changes before closing then you need to update your application but if you get married or have a child after your loan closes, then this does not affect your mortgage.  In this specific example, your mortgage remains valid even if your household income increases because you tied the knot and your spouse moved in to the home.  

 These examples demonstrate why you should wait until after your mortgage closes -- and not just until after you have submitted your application -- before you make any major personal or financial decisions. Significant changes in your personal, financial or credit profile before closing can cause your mortgage to be rejected.

Finally, providing dishonest information on your application to get around a qualification guideline such as an income limit is an an example of mortgage fraud, which can result in your loan being invalidated or potentially worse.  This is why the best course of action is to always provide accurate information on your mortgage application.  As long as you do this, your mortgage should remain valid even if your circumstances change after closing.

The table below shows mortgage terms for leading lenders in your area.  We recommend that you contact multiple lenders to confirm their eligibility guidelines.  Shopping lenders and comparing proposals is the best way to save money on your mortgage.

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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. Click for more information on rates and product details.

Sources

"Uniform Residential Loan Application (Form 1003)."  Originating & Underwriting.  Fannie Mae, September 29 2015.  Web.

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About the author

Michael Jensen, Mortgage and Finance Guru

Michael is the co-founder of FREEandCLEAR. Michael possesses extensive knowledge about mortgages and finance and has been writing about mortgages for nearly a decade. His work has been featured in leading national and industry publications. More about Michael

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