You’ve done it! You did your research, followed the homebuying tips, and found the perfect True Homes community.
Next, you did more research, followed the home financing tips, and secured your mortgage financing.
Now, it’s smooth sailing, right?
Probably. But here are a few extra financing tips to take you from contract to closing – a timeframe where a misstep can lead to a delay or even to a cancellation!
Postpone Large Purchases
As tempting as it is to start purchasing the furniture to fill your new True Homes abode, please wait. Your preapproval for the mortgage may have been based on the amount of cash you have on hand or your debt-to-income ratio. Cash reserves may be needed for expenses prior to closing – such as your home inspection – or at the closing table, so hang onto them.
Avoid New Credit
If you’re thinking you’ll just put the furniture on a credit card or even open a new store credit card to save on your first purchase, think again! Accessing new credit can lower your credit score. Your mortgage company will probably run your credit again before closing. A lower score could impact the amount of interest you pay or even cause you to no longer qualify for the loan.
New debt could also change your debt-to-income ratio – that’s the percentage of your monthly income that’s used to pay debts like your mortgage, car loan, student loans, child support, and credit cards. If the percentage of debt you pay exceeds the standard for the loan program, you will no longer qualify.
Document Your Deposits
Mortgage underwriters will likely want documentation to back up any large deposits into your accounts during this period and potentially for a few months prior. Did you make some cash from your moving sale? It’s probably best to use it for groceries or other expenditures rather than depositing it. Did you sell an old car or boat to raise money for your down payment? Be prepared to show the bill of sale and documentation of the transfer of ownership.
Many home buyers receive gifts from family members to put toward their down payment. In this case, the mortgage company will request a gift letter and documentation from the benefactor to demonstrate that the funds are not actually a loan.
Prepare for Closing Day
Communicate well with your mortgage lender so you’ll know what to expect on closing day. You’ll be signing a stack of documents, so find out if you’ll have a chance to preview them before the closing. You’re also make your down payment and other pre-paid expenses at the closing table. Talk with your lender about how to make these payments. Often, a wire transfer or a cashier’s check is required.
Be Wary of Fraud
If you receive an email, text message or even a call requesting a change in how you make your payment at closing, DO NOT ACT. Follow up with a call to your lender to speak with someone you trust. Call a number or visit a website you’ve used before – not a number, link or email provided in the request – and communicate with someone you trust. It’s wise to discuss the possibility of fraud with your lender early in the process to determine the best action to take if you suspect a request may not be valid.
Get ready to feel at home!
After closing on your True Homes home, there’s one thing that’s guaranteed to happen – all those months of researching, perusing the home buying tips, collecting decorating pins, and following financing tips will pay off, and you’ll finally feel at home. Enjoy!