My friend’s Facebook page has been counting down the hours to the Ducks game on Saturday night. What better way to watch the big game on a brand new big screen TV? I’d have to agree. Sounds like a great idea but if you are in escrow STOP! My friend is not in escrow and he has a massive TV but we have a transaction working around the purchase of a big ticket item prior to closing. The point is if you are buying a home your lender is watching what you are doing with your cash and the liabilities you take on (credit).
This includes “no interest or payments for” [pick time frame]. A number of years ago a client rolled up in their brand new car and exclaimed, “Don’t worry there are no payments for six months.” The bank refused to lend as their debt to income ratio had changed beyond guidelines.
Going back to the TV example… Many lenders require that you have cash reserves at closing. Let’s say six months and the mortgage payment is $1000. With the bank statements given to the lender they see you have $7000 in savings and they are happy. Your approval is based on what was provided weeks or even months ago. Then right before closing they request the most recent statement or transaction summary and see that you only have $5000. “What happened,” the lender asks? “I bought a new TV… is that a problem?” “Yup.”
Add to the list of things not to do while buying a home: quit your job or get fired. You may not be able to control the latter but escrow is not the time to walk into your boss’s office and sing, “take this job and shove it.” Funny thing these days- lenders care that you are employed and they may even verify employment the day a property is scheduled to record.
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