When my parents bought their last house, they tried to think ahead. But, they ended up with a mess on their hands…
My parents are pretty good at planning. They bought their home in Myrtle Beach and gave themselves an entire year to close up their old house and then sell it. They like to plan WAY in advance like that. No stress. No pressure. No surprises.
When they were approaching the close date on the new house, they thought they would get ahead of the game just a little. They went out and bought their high-efficiency, front load washer and dryer so that they could be delivered just after closing.
If you know anything about real estate or loan processing, you are probably groaning right now.
But, if you are like most people, you’re wondering why…
Just about the worst thing you can do while your mortgage loan is being processed is to make an unexpected large purchase. There’s one thing most people don’t understand in the home-purchasing process: Their credit is monitored, right up to the day they sign the contract says Tom Wind, executive vice president of home lending for EverBank in Jacksonville, Fla. “When people think they’re approved [they also think] they’re done,” he says. “They’re not done until the loan closes,” he said. (credit MarketWatch.com)
In fact, people tend to start spending more just before they close on a house, which is just the opposite if what you should do. Most folks have paid off or paid down credit cards to clean up their credit when they apply for the loan. So, they might be tempted to “think ahead” on big-ticket items they will need for the new home. Large purchases like appliances, furniture, and even a new phone can throw off your debt-to-income ratio and blow your deal right out of the water.
A good rule of thumb is this: if you are going to buy ANYTHING aside from groceries during your loan processing, call your lender first.
It may sound drastic and overly cautious, but it is worth it. You are under the microscope by your lender from the moment you begin the loan application until you sign the closing documents. And, in most real estate transactions, everyone is on a schedule of moving and expecting a certain close date. One wrong move in your spending habits and you could throw the entire deal off and delay closing.
So, that new car, washer/dryer, or the latest iPhone needs to wait…at least until after you sign everything. I have clients who went straight from the closing table over to the car lot to buy a new car. But you see, after closing is just fine…not before!
My parents didn’t think to ask their lender about the washer and dryer. They didn’t think to ask me (a Realtor). They are grown adults. They didn’t think they needed to ask anyone for advice or permission on how or when to spend their money. And, normally, that is fine. But, not during loan processing.
It all worked out and their lender worked with them to get the unexpected mess cleaned up. They moved into their new home and are living happily ever after. But, the situation caused a lot of unnecessary stress.
And, who needs that when you are closing on your new home?