We’ve all been there – lying awake at night, envisioning the perfect interior design scheme… It’s one of the most fun parts of buying a new home! But, sadly, it’s best to leave those plans in your imagination until the deal is signed, sealed, and delivered. Otherwise, any big purchases may come back to haunt you.
Should You Buy Furniture before the closing of the house in Illinois? It’s highly recommended that most buyers put on hold any and every large transaction or request for credit. Furniture can be purchased after closing.
If it looks like everything is going well, you might be wondering “why shouldn’t I purchase furniture before I close on my new home?”. While we respect your optimism, you may not be aware of all the variables that influence your chance of getting a mortgage on your property.
If you’re still not convinced, keep reading to find out exactly why you shouldn’t make any major purchases until after the closing process has finished. We will also cover what items and expenses you should 100% avoid before closing.
The “No big transaction” rule explained.
The rule of thumb is – no big transactions. But what exactly is considered a big purchase during underwriting?
The definition of “big” is subjective. Some people might consider a purchase of $200 to be big, whereas others might consider anything over $1,000 to be big. It’s probably best if you consult with your mortgage lender or financial advisor about what they think constitutes as “big.” Here is a clear definition of big purchases that have cost closings:
- New car, truck, or RV
- New credit lines for furniture / ‘Same as cash’ (i.e., interest-free deferred purchases)
- New appliances
- New department store credit
While going through the underwriting procedure, it’s always advisable to put off any major expenditure; but if you must, make sure you’re purchasing with cash; there’s no harm in doing so. But be warned, if you are purchasing all cash and are unable to provide verification of the source, you may be asked to explain where your money came from. This will delay closing and cost more.
Things You Shouldn’t Do When Waiting to Close a Real Estate Sale.
I know you’re eager to fill your fresh property with all new furnishings and decorations. However, while you wait to close on your new house, here are a few other warnings to heed:
- Do not request a credit report check
- Do not close any credit accounts
- Do not increase or request an increase in credit amounts
A change in your credit report and or a credit inquiry can change your ability to close on your home. Opening a new credit account can have the same effect as making a big purchase. This will alter your ability to close on time, and it may also affect your interest rate if you are using an FHA loan or VA loan.
Don’t forget that changing anything in your financials can change the underwriting process. It sounds harsh, but the lender simply does not want you making any changes that affect your ability to close. It’s best if you just sit tight and save up for all new big purchases after closing is completed.
The best possible scenario is actually doing nothing at all until after you close on your property – congrats on not making any big purchases! Plus, a little extra thinking time can be a good thing. Maybe in a few months, you’ll come to realize that a yellow leather sofa isn’t such a great idea…
When Is It Safe To Make A Big Purchase?
This part is simple – it’s safe after the closing process is complete. This is because, after this time, there will be no more surprises. All variables will be known to you. In this case, you won’t have to worry about adjustments being made because of your purchases.
If you’re really feeling the frustration, you can speed things up a little by making the purchase after you receive your clear to close. Just make sure to contact your loan officer about your specific situation. By and large, though, it’s better to wait.
When is the last credit check before closing?
The last credit check before closing can happen after the appraisal is complete. This is because you have already gone through the final underwriting process and any changes to your loan will be finalized. After this, there should not be any more items requiring a change in order for you to close.
In some cases, the mortgage lender may request a final credit check before closing to make sure the lender’s risk hasn’t changed. If everything checks out, then this will not affect your ability to close early! You should also keep in mind that the lender will need to reassess your credit report if your liability has changed. It’s always best to keep your credit report in both credit pulls consistent.
Conclusion
As you can see, it’s not a great idea to make any large purchases until after closing is official. However, if the need arises and you are already purchased for some reason, call your loan officer in order to get clarification on what is acceptable.
Don’t forget to follow the rules outlined in this blog post. No big transactions during the underwriting process!
If you have any questions or are ready to buy, call us today at (708) 259-2087. We would love to help you with all your real estate needs and tell you how easy it is for FHA loans — even if your credit isn’t so great.
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