Homebuyers in the final stages of the loan underwriting process should be careful to watch any frivolous spending to avoid getting their loan rejected or delayed.
Borrowers typically think that their lender is satisfied with their history after their loan has been approved, but borrowers should be advised to keep their credit history the exact same until everything is final, a report by the Wall Street Journal said.
New liabilities that pop-up on a potential borrowers credit before during a mortgage closing is likely to delay or even reject a loan application, according to the report.
This would affect buyers closest to the brink of rejection, the report added. For example, if a borrower’s DTI was 44% when they applied, but they tipped over 45% after a impractical purchase during the closing process, they could be rejected, the report said. Higher quality borrowers not on the edge of maximum DTI’s would have less of a problem.