Don’t tell me what to do. Tell me WHY I shouldn’t do it so I can learn.
Last post we learned about why quitting your job, buying a new car or using your credit cards can cause you to lose your dream home (if you missed that post, look here
). Now let’s tackle a few more things you don’t want to do if you’re buying a home. Well you shouldn’t do if you actually want to close on that house you have under contract.
Thou shalt not spend money you have set aside for closing.
This is a big one. People seem to spend money like water…especially when they are in the process of buying a home. Stop. Don’t do it.
I’m not saying to not spend any money. I do want you to pay your current bills and eat. But, outside of the money you absolutely have to spend to have food and shelter, you shouldn’t spend any money. See a great new suit….don’t buy it. Find the perfect couch for your new house???? It won’t look good on a curb instead of in your new home.
What I am saying is not to spend anything you don’t have to. This isn’t a cold turkey budget process. It’s because your loan has been approved based on your assets. That means I have counted every penny you told me about. If you aren’t using it for your cash to close then I have counted it in your reserves. Reserves are the money you have left over after closing to take care of any emergencies. Having reserves can mean the difference in your loan being approved or declined. If something does come up, talk to your loan officer first. They can tell you if that expenditure will be the nail in the coffin or will slide on by like water off a duck’s back.
Thou shall not omit debts or liabilities from your loan application.
Let’s call it what it is. Fraud. Misrepresenting your debts is considered fraud. You are required to disclose all debts, including any alimony or child support that you pay. (Side note: you aren’t required to disclose all of your assets or income- only what you want considered in qualifying for the loan). And, your lender is going to find out. You would be surprised at what the documentation you provide will reveal. Don’t get caught doing something stupid. Your lender is here to help you. If at all possible they will make your loan work. If not, that “no” is the kindest thing they can do. You don’t want to have such a massive house payment that there is no room for any fun or food in your life.
Thou shalt not buy furniture.
Right. Don’t do it. Those pictures in magazines rock. You want your new house to rock. I know that those commercials have good pitch. Buy now, make no payments until sometime next century. But, I have to look at every debt you have…regardless of whether you have to make a payment at this time. Eventually you will have to make a payment; so, I have to count that debt in your debt ratio. Remember how I said that couch would look on your curb? Yeah, not so much. It looks better in your house. Let’s make sure you get your house and buy the furniture after you move in.
Thou shalt not originate any inquiries into your credit.
Like not disclosing your debts, we will find out about new loans. There is no way we won’t. We have what is called UDM or undisclosed debt monitoring. The credit bureaus alert your lender if you have a new credit inquiry. This will cause your lender to ask you if you have a new debt. At best, this will cause a delay as the underwriter may need to look at your loan again. At worst, that new debt could kick your debt ratio into overdrive and cause your loan to be declined. Bye-bye new house.
This leaves us with three more ways to lose your dream home. Join us next post to learn the why behind the last of the 10 Commandments.
If you have a burning question or just want to chat — I love to be social……you can reach me on Twitter (@ChrisEllaLoans), Snapchat (ChrisElla2), CyberDust (ChrisElla), email ChristyS@StarkeyMtg.com, at the office at 912.721.9400, and my website at www.LoansWithChristy.com . Find out more about me and more ways we can network (Facebook, Instagram, Twitter) at www.about.me/chrisella
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