Don’t Open Your Wallet, Until You Close Escrow


It’s an easy temptation to give in to. You’ve just bought your next house, and it’s 1,000 square feet bigger than your last house, or it has a covered patio that you didn’t have before, or it doesn’t have the stainless steel appliances that you’ve grown accustomed to. You just have to buy new furniture!

Fine. But before you run up any new department store credit card debt, or make one last purchase off of your old home equity line of credit, consider first the potential ramifications.

Did you know that lenders now are often pulling a second credit report of yours a week or few days before your scheduled close of escrow?

Yes, if you change your debt ratio between the time you get pre-qualified and when you close escrow, lenders can change their underwriting decision. They can and will, if they feel the new debt you have incurred has changed your financial ability to repay their loan.

Before you make any major purchases, especially any purchases on credit, do one of two things.

1. Talk with your loan officer, and ask if the amount you would like to spend will change the lender’s underwriting decision in any way.

2. Or, better yet, take those leather home theatre reclining chairs (with the cupholders) back out of your shopping cart, and wait until after closing. The chairs will wait for you.

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About Doug Hill

Doug Hill is an Associate Broker with Coldwell Banker Residential Brokerage, and founded The Hill Group with his wife, Kirsten in 2003. Combined, they have helped over 1,000+ clients buy and sell homes in the Phoenix Metropolitan Area. Doug holds a Bachelor's Degree in Business Management & Economics, and is a Navy veteran. He is an active member of the Southeast Valley Regional Association of Realtors on their Professional Standards Board, and he and his wife have had the #1 team for Coldwell Banker in Arizona for multiple years in a row. He loves to read, travel, and spend time with his family and friends.
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