Generally, I have a bit of conversation with my Home Buyer Clients who are applying for a mortgage as part of their home purchase – – “Keep your credit clean, pay your bills on time, keep saving, don’t buy anything big on credit, and for heaven sakes, don’t co-sign a loan for anyone” . . . pretty much your common-sense type advice. If a Home Buyer is stretching a bit to qualify for the loan on the home they are buying, this is even more important as a blip in the wrong direction could have huge impact.
But, there is an added challenge for Home Buyers under contract during the holidays as so much of the joy and happiness of our seasonal festivities has to do with gifts and giving. I don’t want to put a damper on anyone’s Holiday Spending (I mean spirit), but I also want my Home Buyer Clients, who are under contract right now, to actually be able to close on their homes after the holidays, as scheduled. “Whatever could go wrong during this most wonderful time of the year?” they ask?
Almost all of the underlying investors in mortgages (Fannie Mae and Freddie Mac included) require that all lenders pull a final credit report a few days before closing. Please read that sentence again.
Many Home Buyers are under the impression that once the bank runs that initial credit check, they are off the hook. In too many cases Home Buyers think they are all set with their mortgage loan after the original application and they are then free to book a vacation, buy furniture for their new home, or put a big dent in credit card limits with Holiday Spending. There are so many more temptations during the holidays! Do they realize that just taking advantage of a credit card offer in a department store – – they have just applied for new credit – – could cause a hiccup in their loan process? Was that 10% discount, on that one purchase, worth jeopardizing their mortgage loan? Probably not. Did they know that’s what they were doing? Certainly not.
Depending on how much amuck a Home Buyer runs with Holiday Spending, they may still be able to move forward and close on their new home . . . or maybe not. Finding unexpected and additional items when the lender re-checks their credit just prior to closing is nerve-wracking for everyone and holds things up as a scramble to obtain documentation ensues. Worst case scenario, they’ve over-spent and don’t get their new house (those pesky debt-to-income ratios), and no one wants that to happen.
Please remember, even though a Home Buyer has completed their inspections, the appraisal is in OK, the Seller has promised to make those negotiated repairs, and everyone is just marching in place toward a closing that is scheduled after New Year’s . . . Please remember, that the lender is going to check the borrower’s credit one last time, and no one wants to be a Home Buyer out in the cold because they over-indulged in Holiday Spending!
Maine Home Realty – Giving Home Buyers the Attention they Deserve!