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Holiday shopping can kill a closing

NEW YORK – Nov. 30, 2015 – Everyone loves a good sale, but buyers who go crazy buying gifts and “things for our new home” could jeopardize their ability to close on that home.
After buyers receive a home loan preapproval, they must be cautious with their finances. If they go overboard with shopping in the interim, they could kill the loan approval entirely.
Here’s what to make sure clients know:
Don’t apply for new credit or accumulate new debt. It’s tempting to apply for a new store credit card that offers a discount above and beyond existing sale prices, but just filling out an application could be risky for your clients’ credit profile. Opening a line of credit requires a credit inquiry, which could not only stall their mortgage loan application but also impact their debt-to-income ratio, making a lender believe they’re a greater risk than they originally appeared.
Homebuyers need to avoid major purchases, such as furniture or a car, before the home buying process is complete, says Tammi Robson, a mortgage broker at Metro Lenders in Denver.
Don’t transfer large amounts of money. Homebuyers need to keep their money in one place as they await closing. Shuffling money between accounts can send red flags to lenders and make them worry about undocumented funds or money troubles that they may not have spotted beforehand.
Watch the gift money. If families offer cash for holiday presents, buyers need to be aware that this may put their mortgage applications at risk. Lenders will scrutinize their accounts and look for unusual deposits, such as those that are 50 percent or more of their monthly income. They also look for any unusual withdrawals. Buyers may need to be prepared to explain any large deposits or withdrawals.
Source: “Preapproved? Don’t Let Holiday Shopping Kill Your Home Purchase,” Forbes/Trulia (Nov. 24, 2015)
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Source: Florida Realtors Feed

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