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Old 01-20-2010, 10:03 PM
 
145 posts, read 690,086 times
Reputation: 78

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I have heard it recommended that people not charge a bunch of items on their credit cards during the homebuying process so that it doesn't cause any problems with the mortgage approval.

I know that they check your credit when you apply for a mortgage. At what point in the process do they check your credit again?

In our case, the docs were sent to the escrow company tonight and we are scheduled to close in a week.

Are we safe to make our purchases for the home (furniture, appliances, etc) on our credit card at this point, or are they going to check one more time before we close?

If they are going to check, are they looking at total dollar value on credit cards, or just whether or not we are over a certain percentage of our credit limit on each card? We pay our bills in full each month and never carry a balance, but I don't know if that shows on the credit check or if it will look like our current balance on all of our cards are balances that we carry.
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Old 01-20-2010, 11:09 PM
 
211 posts, read 725,017 times
Reputation: 94
This is just common sense, actually. Until the house closes, and the key is in your hands, do not make any purchases that could adversely or materially affect your finances or credit, especially if you are not in the position to really do so anyway.
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Old 01-20-2010, 11:41 PM
 
145 posts, read 690,086 times
Reputation: 78
We actually have no problems paying for these items. We just prefer the protection we get from a credit card vs. using cash. Us being in a position to pay for the items is not the issue. We NEVER carry a balance and pay in full at the end of the month to avoid finance charges. We do not buy things unless we have money in the bank to pay for them. This mortgage will be our only debt.

There are items we need to buy for the house now due to timing issues.

I am looking for an actual answer to my questions: when do they do the final credit check? Are they looking at total dollars on our credit card or percentage of available credit?
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Old 01-21-2010, 05:49 AM
 
Location: Dallas TX
14,298 posts, read 20,550,720 times
Reputation: 20166
When we refinanced our house they did the last credit check about two weeks before the closing. They found a discrepency, sadly they had attached another John Doe to hubby's credit, we had to clear up. Once that was done the closing was scheduled.

I asked for a new credit check to be run to see if we could get a lower interest rate since John Doe really had messed up our score. I was told they only do it once, we were SOL and scheduled to close.
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Old 01-21-2010, 05:55 AM
 
Location: Plano, Texas
1,676 posts, read 6,334,056 times
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Most lenders will use the initial credit report and not run again before closing. But to answer your question, if they did pull credit all they would look at is the minimum monthly payment. That payment would be counted against your income to determine your debt to income(DTI) ratio. That ratio should be under 45% but can go higher.

The total dollars and percent of available credit will be reflected in your credit score.

If you can wait to buy until the home closes, that is the best option. But if you have excellent credit, good income, low debt ratio, etc... buying some items with credit cards probably wont kill your home loan. Additionally, credit reports are about a month behind so any purchases you make now will not be reflected on credit report until next month.
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Old 01-21-2010, 07:50 AM
 
Location: Northern Virginia
1,419 posts, read 2,935,913 times
Reputation: 433
doesn't sound like you're at high risk to have it affect your mortgage, so long as you have excellent credit. If you're borderline, then I would wait.
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Old 01-21-2010, 08:15 AM
 
Location: Clayton, NC
502 posts, read 1,430,506 times
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I recently had a lender re-run a client's credit two days before closing.
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Old 01-21-2010, 12:29 PM
 
Location: Wake Forest, NC
835 posts, read 3,528,288 times
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1 reason that credit would need to be rerun is it does expire- generally about 90 days from pull to closing.

A colleague of mine once had a client who was buying a move up house and was moving through the process fine until underwiting had to rerun credit a few days before closing and found she had bought $30k worth of furniture on credit. DTI too high and loan rejected. this poor woman had no place to live because she had already sold her previous home. Yes, this is the worst case scenarion but hold off until after closing.
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Old 01-21-2010, 02:47 PM
 
Location: anywhere
1,730 posts, read 3,996,626 times
Reputation: 1840
Play it safe and wait until you close. I had a lender last year pull a report on the morning of the closing and my dip**** client had gone to Rooms To Go and applied for a card and since the inquiry showed up, we had to get documentaion from RTG of what the balance was and what the payments were going to be. Thankfully the client had a teensy bit of room debt ratio wise but if she had increased her payment by more than $ 30 the underwriter would have declined the loan.
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Old 01-21-2010, 03:01 PM
 
Location: Richardson, TX
10,126 posts, read 16,721,272 times
Reputation: 24637
Do people learn nothing from even the most time-honored cliches?

Buying furniture before you close is counting your chickens before they've hatched!
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