Good article in the WSJ about how lenders might actually be checking your credit on closing day, hence advising would-be benefactors of the $8000 first time homebuyer tax credit to NOT buy stuff until after you close.
Here’s some more of the good snippets from the article:
With the deadline on the first-time home buyer tax credit looming, plenty of buyers are under contract and looking to close before Nov. 30. Excited to move into a new home, some of these first-timers start hitting the stores shopping for new furniture, appliances or curtains.
Real estate agents are reminding buyers to wait until the close to start buying stuff. The reason: Lenders are occasionally running credit reports on closing day, and they might not like to see an increase in credit card debt or indications that debt could soon increase.
While such measures have been used over the years, lenders, still dealing with the fallout from the boom’s lax lending standards, are being especially particular these days. Even buyers with great credit scores face scrutiny.
Agents also advise not moving money between accounts, so don’t join two savings accounts, transfer large sums out of savings or add more funding to checking. Emptying out an account could look like money’s being spent, and lenders might request a paper trail for the money flow. That could delay the closing or, in rare cases, terminate the loan. That wouldn’t necessarily free the buyer from the obligation to buy the home.
Dan Rider, a broker with Dickson Realty in Reno, Nev., says one of his recent closings was delayed by five days when lenders spotted a $500 deposit in a buyer’s checking account. It wasn’t a gift – it was a repaid loan from her mother – but it sparked concerns that the buyer needed help to close the deal. Though the buyer had a healthy checking balance, the lender wanted canceled checks and bank statements and both parties had to write an explanatory letter.
BOTTOM LINE: Stay out of the stores. Don’t move money around more than necessary.