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So we are closing our house in three weeks, and we all approved by the builder's financing. From reading here and other places, plus the literature given to us by the financing company, we should not apply for credit cards so that our credit score is not affected.
Since this is a new house, we will need blinds/a refrigerator and a couple of pieces of furniture. Altogether, it will be about 5K. The hardware store is offering a 2 yr no interest on financing and so is the furniture company. I want to take advantage of this, since I don't want to pay out 5K if I can hold on to it for longer. When is the latest before closing that we can apply for the credit cards at these two places? We have been told since we do not have any credit cards debts, and have a very good credit score AND no debts other than the two cars ( one will get paid off in two months) we are solid, but I still don't want to mess with our credit scores before we close for 340K. What would you recommend? When would the best time be to to do this so that we don't ding our credit before we close? Ideally I wat to do it before we close since the blinds/refrigerator and furniture will take at least a week to be delivered.
Thanks for your replies.
B
Did you have these expenses already budgeted for as part of your overall closing costs? In other words do have the cash? Sounds like you do. For a new home it's important to remember exactly those things you listed. Plus what about the closing costs associated with your home and financing. Do you have a prelim HUD-1 yet? Is the builder going hit you with the title insurance policy (this is a common surprise in my area)? It's probably already in your sales contract.
I would be sweating out my exact closing costs before worrying about taking on additional consumer debt and potentially risk the whole deal. How much would you be out in terms of $$ and hardship if the deal fell through? And how much money are you really going to save in interest for those small amounts? Probably not as much as it seems. So you would be risking a lot for very small payoff.
Maybe the builder's financing company would be happy to roll in some things like window treatments and appliances if you don't have the cash for them now. Might even get some discounts on the costs of the items.
I vote don't risk it.
Last edited by eltbee; 10-23-2009 at 07:30 AM..
Reason: typo
If this were a normal mortgage or FHA I would strongly advocate for holding off until after closing. With a BUILDER doing the financing I think you should be fine.
The rule is really to wait until after closing as it is completely POSSIBLE for the lender to run a credit report literally as walk into closing, and frankly that is a great way for them to triple check against scammers.
A builder has a whole helluva lot more incentive to get the inventory off their hands and onto your financial back and if the lender is one they own or work with routinely they are certainly going to be aware that appliances and furniture are customary needs of those moving into a newly built home.
One word of caution. The firms that offer "zero percentage financing on in store purchases" are well known as the EASIEST credit grantors. They routinely JACK fees and rates to the MAX the law allows as soon as they can. Further the credit scoring algorithms rate this type of consumer debt very poorly, as so many consumers get stuck with high rates for being the slightest bit past due. Using this type of financing with extreme diligence CAN save wise buyers a bit of dough BUT it can hurt your scores even if you are on time (as they only approve you for the pruchase amount and "max out" your available credit with them) as well costing much more than regular credit cards IF anything in your ablity to pay promptyly changes...
The closing costs are all worked out - and yes, I have the cash. I just want to hold on to it and then pay it all of a couple of months before the free financing ends. The builder gave us great incentives - plus putting in a bit towards the closing as well. I am looking at putting 1k on the furniture, and 4K on the blinds/refrigerator.
This happened to a colleague's client a few years ago.
Selling 1 house and buying another- everything was approved and ready to go on both sides. She closes her sale in the morning and going to purchase closing get's call from LO that she can't close because they updated credit that morning and found she went out and bought a houseful of furniture($30k) for her new home and now exceeded giudelines on debt to income because it was all financed.
Is this rare- absolutely but don't take a chnace on it being you next. Be patient and make any large purchases the day after closing.
dad2jules - eeks!!! that is terrible. Thanks for letting me know. While I was not planning to spend 30K, I am not taking the chance.
arielmina - did HD say how long it will take for your blinds to come in? What are you using to cover your blinds meanwhile?
Thanks,
B
I ordered the custom blinds on Saturday after getting a measurement done on Thursday. They said they are supposed to come in the first week of Nov which would be about two weeks, but she said they definitely could come in sooner. There's a great invention though that we've used for our bathroom windows - temporary blinds! You cut them yourselves to fit and it's been a life saver for our master bathroom. I paid $12.99 or so for two blinds.
Oh and i needed a washer/dryer which I ordered before close but put on my AMEX...came a few days after we moved in...worked out great.
Thanks for the information. I will go down that route...
Also, we need to get a refrigerator and went to HH Gregg yesterday and they said that if we come in the day we close and buy the refrigerator, they can get it to us the next day, which will work out just perfect...
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