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Don’t Jeopardize Your Real Estate Closing

October 13, 2010

Congratulations! You’ve signed a contract to purchase a new home and now you are waiting for your mortgage to be approved and for closing to take place. You are excited to move into your new home and usually preparation and economizing is a responsible thing.

You have plans to buy furniture so it will be there when you are ready to move it. You’re thinking about selecting carpeting for the whole house – there’s a great sale going on and if you pay for it now you have no interest for 90 days and can take advantage of a great price.

Maybe you have some credit card debt and want to pay it off so you can have lower expenses once you have moved. How about closing that credit line that you haven’t used in a while?

Now that you’re moving you might get the urge to start comparison shopping for new insurance?

How about that new job with the raise in pay that you’ve been offered?

WARNING! All of these things that seem so innocent can really jeopardize your ability to close on your mortgage.

As of June 1, 2010, Fannie Mae has mandated a new rule which requires the lender to re-run your credit within three days of your closing. Your mortgage lender has underwritten your loan based on the facts and circumstances that you presented to them at the time of application. All of the above actions may raise a flag. Whether you have increased or decreased your debt load doesn’t matter – it’s the changes that are the problem.

The only thing that might not hurt is paying credit lines down to 50% of your limit. But no closing them, no changing insurance companies, no leasing or purchasing a vehicle, or any other big purchases.  While it might not make sense to you, all of these can lower your credit score and may affect your bank’s willingness to finalize your mortgage loan.

Any change in employment or pay (even an increase) can be a problem.

Wait until after the closing to make these changes or purchases. Protect the ability to close on one of the most important purchase you will make.