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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