Palm State Mortgage Company brings you some tips today about your behavior while you wait for closing on your new home and mortgage.Palm State Makes Mortgage Closing A Breeze!

Now, these are not antiquated rules of etiquette like sit up straight in your chair or wear your little white gloves.

We do not pretend to be experts in Great Aunt Tildy’s rules for behavior at the debutante ball.

However, we are very aware of rules for how you should behave financially in the days after your loan has been approved and your closing date is set!

It is surprising how many mortgage applicants think they are finished with their loan process once the closing date is set.

Before Closing:  Avoid Temptations To Increase Debt

Market Watch recently had an article on the behavior of such loan applicants.  Mark Livingstone, a mortgage broker with Cornerstone First Financial in Washington reported, “I’ve had clients call me and say they’ve quit their job or bought a new car, just before close.  All I can say is “what were you thinking?  I’ve seen a number of deals fall through that way.”

Apparently, it is very common to get in a money-spending mood just before closing.  You have spent some months getting your credit cards and other debts cleared off so your credit profile looks great.  Suddenly you crave a new car or furniture for the new home.

Palm State Mortgage Company advises you to avoid such spending!  Just say, “No!” to new cars, furniture, debt!

The Palm State Guide To Good Behavior Before Closing

We want you to be aware that lenders “question almost any meaningful transaction you make while you’re applying for a mortgage.”

Douglas Boneparth, a financial planner in New York City states, “So, until you close and the keys are in your hands, you are under the magnifying glass.  Our Number One Commandment: You are not “done” with the loan process until the loan closes.

  1. Our Number One Commandment:  In other words, your credit is still being monitored even up to the day of closing.  You are under your lender’s magnifying glass. Palm State Mortgage helps you every step of the mortgage.
  2. Our Number Two Commandment: Do not buy furniture until after the closing, even if they offer you a special deal on delaying payments for a year.  Your lender “assumes you’ll be making a monthly payment straight from the start, which will likely throw off your debt-to-income ratio.  All that installment debt goes on your credit before you make a payment.  If a lender figures out the debt is deferred, they still will often take your future payments into account.  Remember, lenders want your total debt-to-income ratio to be no more than 43 percent.  Only 28 per cent should be housing payment.
  3. Our Number Three Commandment: Do not buy or lease a new car before closing on your home mortgage!

Not only buying a car, but even leasing one can be considered misbehavior as you await closing.  You see, your lender could consider “the lease payments like any other debt payment and the lease includes a hard credit check, says Sabine Schoenberg. Sabine is a realtor in Greenwich, Conn. who also runs SabinesHome.com.”

Your cash should be available in your bank account, not folded into a new debt.

Another important point is that an auto lease might require cash at your signing, which could have been better spent by paying off other debts or enlarging your down payment in preparation for your new home and mortgage.

  1. Our Number Four Commandment: Right before closing is not the time to change jobs, even if you go to a higher paying position at the new company.

Lenders say, “The risk you’re going to have is we’re going to have to call the old company.  If we find out you’re not there, it’s going to be an issue.”  You can read more about this issue in “Three Ways To Mess Up A Home Mortgage Loan at this convenient online resource. 

5. Our Number Five Commandment: Sometimes you need to scrape up extra cash to take to closing.  However this does not mean you should utilize cash advances from credit cards.  Remember: Don’t use credit card money at closing!Don't compromise your closing with debts while you wait!

What if your mother-in-law is giving you a large amount of money as a wedding or get started gift?  Be sure your lender knows about it, as well as any withdrawals from your IRA for the down payment.  These are easily understood transactions, but if your lenders do not know where your cash is coming from, you can lose your home mortgage deal as well as your dream home.

None of these five commandments are very difficult to understand, but you must train yourself to be very aware of your financial behavior in the weeks before closing.

Now you know the secrets of pre-closing financial behavior.  We know you will keep them in mind and they are not near as difficult as Aunt Tildy’s protocols for the Debutante Ball.

However, these five commandments are more serious and we do not want you to lose the mortgage opportunity you worked so hard to attain.  Remember, Palm State Mortgage Company will be with you every step of the way during your mortgage loan process.