Are you buying a new home? WAIT to buy new furniture!

iStock_000008143756_MediumI have been working with a couple of clients who are buying homes and who’ve recently asked if it’s okay for them to buy furniture before closing on their new home. It must be all the “Fourth of July blow-out” sales going on that’s causing this question to come up recently.

First of all, I’m so glad they’re asking questions like this. I cannot stress how important it is to communicate with your Loan Officer. It’s no fun when you’ve done things that may seem small, like paying off a debt or buying furniture with delayed financing, only to have it negatively impact your loan or cause you to have to jump through additional hoops.

I know that waiting to buy your brand new furniture until after you have closed on your home may be an inconvenience…but here is why I often provide this advice:

  • Credit is re-verified prior to closing. This may take place the day of closing or the day before. When new debts are discovered or even if you have higher balances on your existing credit cards than what was disclosed on your initial loan application, your loan may have to go through underwriting again. If the new payment causes your debt to income ratio to exceed what is allowed with your guidelines, you may wind up with new furniture and no new mortgage or new home.
  • New debt drops your credit score. New debts tend to drop your credit score. When the lender re-pulls your credit and it’s a “hard” pull vs. a “soft” pull (typically this would be because your existing credit report is set to expire prior to closing), you may be stuck with the new, lower credit score. Lower credit scores may impact the pricing of your mortgage rate as well as qualifying for the new mortgage. Many mortgages have credit score limits and if your score drops below what is allowed,  your loan may be denied.
  • Inquiries will show on your credit report. If you have applied for credit to finance your new awesome sectional with reclining seats and a built in min-bar, an inquiry will show up on your credit report and you may have the pleasure of writing a “letter of explanation” to the lender to address whether or not you have obtained new credit.
  • Paying cash may not be the answer. If you pay cash or borrow money from Aunt Edna, you may still have to document were the cash came from and the loan or gift from Aunt Edna. If you tap into your own savings, you need to make sure that your Loan Officer is not counting on those savings to be used for “reserves at closing”.

After you close on your new home, you can buy your awesome new furniture and your lender will have nothing to say about it… unless you invite them to your house warming and at that point, they’ll probably just compliment you on your good taste and how nice your home looks. Although it’s an inconvenience to delay getting your new furniture, in my opinion, it’s typically not worth the risk.

Please do ask your Loan Officer first, it is possible that it may be acceptable and it may not jeopardize your application. It never hurts to ask!  :)

What May Impact Mortgage Rates this Week: June 29, 2015

MortgagePorter-JobsReportMortgage backed securities are enjoying bump today with Greece back in the headlines. As I’m writing this post (9:25 am pst) the Dow  is down 229. This is a case where a bad news for the stock market = good news for mortgage rates.

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Fun things to do around Puget Sound this Independence Day

Seattle_fireworksI hope you have a FUN, safe and sane Independence Day. I have fond memories of watching fireworks sitting on the hood of my Mom’s car with my sisters in the Sears parking lot of the old mall in downtown Renton…lots of “oohs and aahs”. :)

Here are some events around the greater Puget Sound area taking place this holiday.

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New Mortgage Disclosures Possibly Delayed

speedbumpThe CFPB is requesting that the deadline for the new “good faith estimate” disclosures (aka “TRID”) be delayed for two months to allow lenders more time to transition into the the new forms…and because the CFPB made an “administrative error” that would have caused a delay with enforcing the rule. From the CFPB’s website:

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Freddie Mac reports last week’s average mortgage rates unchanged

The Freddie Mac PMMS reveals little change in mortgage interest rates over the last week with the 30 year mortgage rate averaging 4.02% with 0.7 points.

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I’m on vacation!

breakUPDATE JUNE 24, 2015:  I’m back!!!

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Freddie Mac reports mortgage rates at 2015 highs

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Freddie Mac’s Primary Mortgage Market Survey reveals just how dramatically mortgage rates have gone up over the last month. Freddie Mac reports that last week, the 30 year fixed conforming mortgage (loan amount $417,000 or lower) interest rate averaged 4.04% priced with 0.6 points. [Read more…]

What May Impact Mortgage Rates this Week: June 8, 2015

Mortgage rates have been marching higher. This week we have very few economic indicators scheduled to be released. Mortgage rates may take their directions from stocks – often moving in the opposite direction. Right now, rates for a jumbo mortgage 30 year fixed are lower than conforming rates!

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