I was congratulating a fellow agent today on writing a contract over the weekend on new construction in Newport News. The builder was running a special for buyers obtaining a VA loan – only $1 earnest money deposit was required and the seller was paying prepaids, points, closing costs, and the VA funding fee. How does it get any better than that??? The day that this new home appeared on the market, the agent promptly informed his buyer and headed out to view the new home that had recently become available because the previous buyer’s loan fell through. Despite warnings, the previous buyer disobeyed this important rule – do not buy things, particularly large ticket items, or open up new accounts prior to closing.
The buyers, so excited about their new home, went out and purchased a new washer, dryer, and other things for their home. The problem with this, however, is that they created more debt, which disqualified them from getting a home loan in that price range. Lenders look very closely at your debt-to-income ratio, to determine how much they are willing to lend you towards your home purchase. Lenders will often re-pull your credit report prior to closing, sometimes even the day of closing, to confirm that your debt-to-income ratios are still where they need to be and to make sure that no new derogatory items have surfaced on your report. So, even if you’re currently under contract on a home, keep paying your bills on time and make sure you keep your debt in check. It is okay to pay down your debt - just don’t increase it!