My husband, Matt, and I are building our new home. This is the sixth in a series of who-knows-how-many. I’m writing from the perspective of a buyer, and an agent, since I am both in this case.
The building has begun in earnest. They broke ground, as I reported last week, and until we get called to make sure that everything electrical is where we want it to be, we get to do a lot of waiting.
This is actually okay with me because now, I need time to shop!! It’s December, and both of our children have December birthdays, plus we celebrate Christmas, so December is a big gift-buying month for us. Matt and I feel really bad about the fact that for our kids, all the gift-giving of the year comes within a 12-day period. Yes, that’s silly. It’s not as if we PLANNED to have both in December, it’s just how it happened. However, we’ve noticed that we tend to over-do it when it comes to gifts for them both. I know that as I’m perusing the shops, I’ll see something that might appeal to one of the kids, and I’ll pick it up, reasoning, “It’ll work for birthday OR Christmas. Good thing I picked it up. I certainly don’t want one of the kids to go without something on their big day, or THE big day!” Consequently, when it comes time to wrap, I find an embarrassing amount of items waiting.
The point is that this year, we called a halt to all that. For two good reasons – one, it’s about time we stop “paying” for the great transgression of having kids in December, and two, we need to make sure we don’t put any large purchases on our credit cards during the house-building process. That’s the real focus behind this post – don’t make any major purchases while you’re in the escrow period.
Don’t buy a new car, or an engagement ring, or even new furniture or appliances (a toaster will probably be okay) for the new house on credit. Even if you’re using cash, if you’re taking it out of your cash reserves that you’ve told the bank you have, don’t do it, either. Here’s the reason why – you were approved to purchase the house you’re buying based upon the financial picture you presented to your lender at the time you applied. If that picture changes in any significant way, the lender can pull back and say, “Hey, wait a minute, partner – you’re not the same borrower you were when you asked us for money earlier.” And then, you can be charged a higher interest rate OR even be declined for the loan.
Don’t apply for any new credit lines, either. This time of year, especially, there will be offers for new credit cards which will save you anywhere from 10%-50% off. “Cari!” I can hear you saying, “But I can SAVE so much money!! That’s GOOD, right?” The answer is no, not when you’re buying a house. Sorry. Don’t close any accounts, either. You want to keep your financial picture as similar to the day you applied for your loan as you can.
This includes not taking a new job, unless you check with your lender, first. Even if you will be making scads more money, the job you have is a long-term sure thing. The new job and the accompanying large salary is a promise. Promises carry less weight with lenders than the proverbial bird in the hand.
Hang tight until you’re in the new house, then spend all the money you can afford, if you want to. Take the new job, buy a car for the third bay in that new 3-car garage, whatever. Just wait, please.
My oldest son understands the dialing back on the gifts. After we explained the Christmas cut-back, my daughter (birthday a few days after Christmas) asked, “Are we going to go soft on birthdays, too?” Ahhhhh, the apple doesn’t fall far from the tree! I think we can get her the new pair of slippers and the stuffed animals she wants without incurring the wrath of our lender.
Part 7 will likely be posted in January. I am scheduled for jury duty at the end of this year, beginning of next year. Depending on whether I get picked to serve on a jury or not will impact my writing time. Plus, the house will be further along in January and I’ll have more to discuss.
If you don’t stop by my blog before the end of the year – Happy Holidays and Happy New Year!
(Stock image courtesy of Shutterstock and used with permission.)