You made the decision to purchase a new home, executed the contract and applied for a mortgage. With today’s great rates you receive your approval letter from the lender, life is good. Now what?
Don’t do what you are tempted to do and go shopping for all the things you will need for your new home. Unlike in the past, lenders often pull a second credit report just before closings and new consumer debt from the furniture store or a new car loan can jeopardize the loan approval that you had on your new home and the whole deal could fall through.
Fannie Mae’s instructions to lenders say that “lenders must determine that all debts of the borrower incurred or closed up to and concurrent with the closing” are considered in the final loan analysis. And if those new loans push your debt to income ratio above the approved limits your loan will be denied.
Don’t take a chance of losing the opportunity to purchase your new home.
Here is a list from Bank of America of the 7 don’ts when buying a new home:
- Don’t buy or lease an auto.
The lender looks carefully at the debt-to-income ratio and a large payment such as a car lease or purchase can greatly impact those ratios and prevent the buyer from qualifying for the home loan.
- Don’t move assets from one bank account to another
These transfers show up as new accounts and complicate the application process, as you must then disclose and document the source of funds for each new account. You can consolidate your accounts after the close
- Don’t change jobs.
A new job may involve a probation period which must be satisfied before income from the new job can be considered for qualifying purposes.
- Don’t buy new furniture or major appliances for the new home.
If the new purchase increases your debt load, or reduces your cash on hand, it can disqualify you from the loan or decrease your funds to close.
- Don’t run a credit report on yourself.
This will show as an inquiry on your lender’s credit report. Inquires must be explained in writing and can slow the process down.
- Don’t attempt to consolidate bills before speaking with your lender.
The lender can advise you if this needs to be done.
- Don’t pack or ship information needed for the loan application.
Important paperwork such as W-2 forms, divorce decrees, Form DD-214, and tax returns should not be sent with your household goods. Duplicates can take weeks to obtain.
Please contact your Saddletree Sales Counselor for additional information.
