Holiday Shopping

Dated: 11/28/2015

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How Holiday Shopping Can Kill a Closing


Everyone loves a good sale, but make sure you don't go crazy with holiday shopping — because it could jeopardize your ability to close on a home purchase. After you have received a preapproval on your home loan, you must be cautious with your finances. If you go overboard with your shopping in the meantime, you could even kill the loan approval entirely.

Don’t apply for new credit or accumulate new debt. It's tempting to apply for a new store credit card offering added discounts on top of sale prices, but just filling out an application could be risky for your credit profile. Opening a line of credit requires a credit inquiry, which could not only stall your mortgage loan application but also impact your debt-to-income ratio. It could make a lender believe you're a greater risk than you originally appeared. Home buyers need to avoid any 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. Home buyers 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 concerned about undocumented funds or money troubles they may not have spotted beforehand.

Watch the gift money. If families are offering cash for holiday presents, buyers need to be aware that this may put their mortgage applications at risk. Lenders will be scrutinizing their accounts and looking for unusual deposits, such as those that are 50 percent or more of their monthly income. They are also looking 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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Chip Franks

The Supreme Commander of The Real Estate MarketPlace and A Good Guy, In General! Ron "Chip" Franks was born in 1972 in the thriving metropolis of Killeen, Texas and makes his profession there as on....

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