Buyers, PUH-LEASE pull out cash for purchases...at least until you close!

By
Real Estate Broker/Owner with Chad and Sandy Real Estate Group BK3183802

 Buyers, PUH-LEASE pull out cash for purchases...at least until you close!

Back on June 1, I posted an announcement (a warning, really) to buyers who are preparing for closing. The rules have changed! Fannie Mae rolled out it's "Loan Quality Initiative" and it's having widespread impact. While many of the rules are not entirely new, the enforcementof them is. Fannie Mae, in an attempt to get repaid, is forcing strict mandatory underwriting guidelines. Buyers need to be extremely cautious of their financial and spending habits during the home purchasing process, especially from the time of initial loan application to the day of closing. Even a small store credit purchase, such as home furnishings at Home Depot, or the application for a new credit card could result in a denied home loan, a canceled closing, and even a forfeiture of the binder deposit according to most purchase and sale agreements. 

Read the Top 3 Ways to Mess Up a Home Closing Here>>

Underwriters will reevaluate a buyer's credit situation a SECOND time, immediately before closing. That means any new credit applications, income or job changes, or new monthly payments could affect the credit report or debt-to-income ratio. Even job position changes, such as moving from salaried to commission-based or changes in commission structure could affect this delicate process.

Home Buyers use cash for Decorating Homes

As I've said previously, a buyer's safest bet is to put a freeze on spending during the home buying process. While furnishing and decorating the new home upon move-in may be part of the homeowner's dream, this could be detrimental if not done cautiously and with cash. Our advice? Secure the home first; improve it later.

The best deals will go to the Smart Property Purchasers! Get your funds together early, plan your budget wisely and be ready to act quickly when the best deals hit the market this summer! 

Need a jump start on dealing with debt? We like Dave Ramsey's Total Money Makeover. Want to search FL foreclosures on your own or set up automatic notifications when they hit the market? Click here and get started for free right now! 

Want to read more about the new Fannie Mae guidelines? (You will have to navigate through a lot of legal jargon, but this is the link to the facts: https://www.efanniemae.com/sf/lqi/pdf/lqisummary.pdf

For more reading on the topic, here are two additional blogs I recommend:

http://www.inman.com/news/2010/06/23/borrowers-face-new-set-credit-checkups

http://www.massrealestatelawblog.com/new-fannie-mae-lqi-rules-lenders-likely-to-order-last-minute-credit-reports-on-borrowers/

Of course, if you have any questions, want to talk to a local lender about your situation, or want to start looking for Jacksonville FL homes, give us a call!

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 Buyers, PUH-LEASE pull out cash for purchases...at least until you close!

 

Comments (1)

Todd Clark
eXp Realty LLC - Tigard, OR
Principle Broker Oregon

Even pulling cash out can be dangerous as Fannie Mae is looking for reserves and if those reserves dry up, so may your loan.

Aug 06, 2010 07:35 PM