If you’re considering to buy a home, you *must* read this

In our fast-paced market, it is extremely important to understand a few rules that might make or break the deal in the final stage: funding. One of the most important of them all – Thou shalt not apply for new credit between the time you apply for a home loan and the day the mortgage closes. 
Imagine this scenario: you’ve gone through pre-approval, submitted the mountains of information that lenders require, the home makes appraisal (yeah!), and you’ve been cleared to close – and then… when you’re sitting at the title company with a pen on hand and ready to sign your financing papers, word comes from underwriting that you can’t close because you’ve been turned down – all because you had to have the new boat for lake Conroe. Or car. Or furniture. On credit.
Fannie Mae requires lenders to check your credit report right before closing.  Many lenders interpret that as “the day of closing.”  So, if you took on a new credit obligation, the lender has to recalculate your debt-to-income ratios. What this means is that you could be turned down for the mortgage at the last hour if your debt-to-income ratio exceeds Fannie’s guidelines.
Once they get the initial approval, many soon-to-be homeowners are so excited they go out and open new credit cards assuming it’s fine because they’ve been approved.  They then go and purchase items for their new home: furniture, appliances, lawn mower, the list goes on and on.  What many homeowners are not aware of is that a new credit report is pulled before closing.  If any new debt has been incurred since the original approval, that new debt must be calculated into their debt-to-income ratio and may throw them out of range for purchasing that much beloved new home they’ve been preparing for.
Most mortgage professionals would advise… once you start the mortgage process, don’t do anything new with regards to taking on additional debt.  Do not open any new credit cards – no matter how enticing the offer – and do not buy a new car – or boat.  Additionally, don’t close any accounts either, unless your mortgage advisor tells you to do so.  Keep in mind, you also don’t want to make any changes to your employment status, i.e.:  don’t change employers even if it’s in the same line of work, and don’t switch from a salaried position to a commission-based one.  When waiting for your loan to close, it’s smartest to just “hold steady” with where you are at.
About Danny Sanchez

Joining Rianne's award-winning team after a successful career as a Program and Operations Manager for a global outsourcing firm (with Fortune 100 companies as his primary clients), Danny has seen The Woodlands grow to what it has become today since 2001. An advocate for innovation and perfecting the Best Possible Real Estate experience, he understands very well that clients always come first. In his own words, "success looks like clients feel that they don't have any needs - because you've more than anticipated them."