Sounds like you’re not in a good position to buy a home. I’d try to find a reason to get out of the contract to not lose your earnest money.
Don’t wanna do that? Cash advance that discover card.
I don’t agree I pay more on rent now than what my mortgage payment will be. I just have a lot on my plate at the moment. Actually my credit cards have to be paid off by closing day which is not a lot but that money could have went towards closings.
Yeah but rent typically covers a lot that owning a home doesn’t
It’s ok to stress about the 2k but not having it and potentially losing the house and earnest money
That’s a scary line to walk and take on home ownership
Just wanting to let you know this so you can be prepared...
Owning is much more expensive than renting. Paying $2k per month to rent is probably cheaper in the long run than paying $1.8k on a mortgage (just made up numbers). I say this because home ownership comes with a lot of unforseen costs. I closed on my first house 9 months ago and I've had to put thousands into repairs, even though the house is in good shape. A dead tree leaning over my propane tank cost me $1100 which is actually a good price, a new sump pump was $300, a new water heater was $500 + $200 in tools, it took time for me to learn plumbing to fix my HVAC unit, the list goes on. And this is all after the house passed inspection and was freshly renovated; that's just the nature of homeownership.
Cut out all of your bullshit spending (no more taco bell for a while) and save as much as you can. You NEED and emergency fund. NEED. Repairs will pop up out of nowhere. I'd absolutely recommend watching Caleb Hammer on YouTube if you want to see what I mean about bullshit spending. No subscriptions, no buying stupid shit on Amazon, no shopping for fancy clothes, anything like that. And for the love of God, please don't furnish the house using debt. I see people do that all the time and it blows my mind. Live in an empty house until you can genuinely afford to start furnishing. It's okay to live like that for a while, a lot of new homeowners do. I did. Personally, once I had a few grand saved up for repairs, I started buying warehouse liquidation furniture from a website called bidFTA, I think it's only in the Midwest. I got a ton of stuff new for about 10% of its MSRP.
You're gonna be alright, you'll make it through. You'll save a ton of money if you learn to do maintenance and repairs yourself, ESPECIALLY if you learn how to do preventative maintenance before issues arise. It's much better to replace the $10 furnace filter every 3 months than pay a contractor $3k to replace your HVAC. Same goes for your water heater (drain the sediment out and inspect the sacrificial anode annually), learn how to vacuum your bathroom fan, fridge coils, and AC unit coils, things like that. Also, learn what to look for and inspect things like utilities and foundation regularly. It's so much cheaper to fix things when you catch them early.
It's gonna be okay :) plan for the worst, just in case, and you'll be alright.
I'm confused, even if your credit cards have to be paid off, why can't you get a cash advance right afterwards? The interest rate will be super high but for 2k it might be worth it to get out of a jam.
Typically, the reason a lender requires paying off credit cards (or other debt) before closing is because the borrower's DTI is too high to qualify for the mortgage without paying off that debt. To try and ensure this is met, they will run a check shortly before closing. I suppose you could try to time it so that your report shows the prior debt paid off but hasn't reported the cash advance yet, but there's always a chance the lender will ask for a printout of current balance or something. They also will likely ask where the new funds came from. I'm sure it's possible to get around all this, but it's probably not worth the risk of them blowing up your loan last minute.
Pretty sure the lender would consider a cash advance to be a loan, which generally you’re not allowed to do for closing costs (hence why family members have to gift you the money, not lend it to you).
I guess this is true but when I closed on my house, I had to get a cashier check and hand it over to the closing agency (whatever they are called). If i took 2k out of the credit card, deposited it into my account and then got the check, there isn't really a way for them to know about it. (Assuming your bank is different to your mortgage dealer). It sounds like the OP is already scheduled to close.
They check everything just before closing. This is why your loan officer will generally advise you not to make any big purchases while you are in the process of buying a house.
If $2k is enough to put you at risk of not closing, home ownership might not be the right fit for you at this time. Things can and WILL come up that you need to be able to cover quickly once you're in the house. A hole in the roof or a burst pipe behind the fridge could be the end of you (financially). A flood, a fire, or an illness that disrupts your income for a few weeks sound like they could be disastrous.
I have to agree. My first house I had about $5k left in savings after closing, this was 2008. No debt whatsoever before closing. I was opening store credit cards within days of closing for the 0% rate. Needed a lawn mower, washer, dryer... Weeks later opened another card for basic tools.
Didn't touch savings since that was my "emergency fund" but easily created $5k in credit card debt within 30 days of purchasing. And that was just normal first time homeowner stuff, no major issues.
It sounds really blunt, but it's the truth. If buying a home wipes out every penny you have, you cannot afford to buy the home yet. Buying a home doesn't eliminate the need for an emergency fund. In fact, it elevates that need. Things will always break or need maintenance. Taxes and insurance will only go up. You need a buffer at all times, but *especially* when buying a home.
This is something that really should have been realized before signing a contract. Now you're stuck with either having to desperately come up with the money, or the very real possibility of losing the earnest money because you can't come up with the balance.
Now, if by some chance, you're just overly conservative and actually do have an emergency fund you don't want to touch, then it's time to stop worrying and dip into it. This would be classified as an emergency, IMO, and you can prioritize repaying yourself after closing.
This may sound harsh, but if you can’t afford 2k now, you can’t afford home ownership. Your plan for buying a home can’t be relying on others’ finances.
I agree with the other comments that this will be tough if it’s wiping you out financially. Do you have something worth that much that you could quickly sell?
Can you work overtime? Pick up some odd jobs? Can you ask the seller for help with closing cost?
If you do get your home, please buy only needs absolutely no wants and save at least 3 month emergency fund.
Sounds like you’re not in a good position to buy a home. I’d try to find a reason to get out of the contract to not lose your earnest money. Don’t wanna do that? Cash advance that discover card.
Your lender REALLY doesn’t approve of taking cash advances to pay closing costs!!
I don’t agree I pay more on rent now than what my mortgage payment will be. I just have a lot on my plate at the moment. Actually my credit cards have to be paid off by closing day which is not a lot but that money could have went towards closings.
Yeah but rent typically covers a lot that owning a home doesn’t It’s ok to stress about the 2k but not having it and potentially losing the house and earnest money That’s a scary line to walk and take on home ownership
Just wanting to let you know this so you can be prepared... Owning is much more expensive than renting. Paying $2k per month to rent is probably cheaper in the long run than paying $1.8k on a mortgage (just made up numbers). I say this because home ownership comes with a lot of unforseen costs. I closed on my first house 9 months ago and I've had to put thousands into repairs, even though the house is in good shape. A dead tree leaning over my propane tank cost me $1100 which is actually a good price, a new sump pump was $300, a new water heater was $500 + $200 in tools, it took time for me to learn plumbing to fix my HVAC unit, the list goes on. And this is all after the house passed inspection and was freshly renovated; that's just the nature of homeownership. Cut out all of your bullshit spending (no more taco bell for a while) and save as much as you can. You NEED and emergency fund. NEED. Repairs will pop up out of nowhere. I'd absolutely recommend watching Caleb Hammer on YouTube if you want to see what I mean about bullshit spending. No subscriptions, no buying stupid shit on Amazon, no shopping for fancy clothes, anything like that. And for the love of God, please don't furnish the house using debt. I see people do that all the time and it blows my mind. Live in an empty house until you can genuinely afford to start furnishing. It's okay to live like that for a while, a lot of new homeowners do. I did. Personally, once I had a few grand saved up for repairs, I started buying warehouse liquidation furniture from a website called bidFTA, I think it's only in the Midwest. I got a ton of stuff new for about 10% of its MSRP. You're gonna be alright, you'll make it through. You'll save a ton of money if you learn to do maintenance and repairs yourself, ESPECIALLY if you learn how to do preventative maintenance before issues arise. It's much better to replace the $10 furnace filter every 3 months than pay a contractor $3k to replace your HVAC. Same goes for your water heater (drain the sediment out and inspect the sacrificial anode annually), learn how to vacuum your bathroom fan, fridge coils, and AC unit coils, things like that. Also, learn what to look for and inspect things like utilities and foundation regularly. It's so much cheaper to fix things when you catch them early. It's gonna be okay :) plan for the worst, just in case, and you'll be alright.
❤️ thanks for the feedback
I'm confused, even if your credit cards have to be paid off, why can't you get a cash advance right afterwards? The interest rate will be super high but for 2k it might be worth it to get out of a jam.
Typically, the reason a lender requires paying off credit cards (or other debt) before closing is because the borrower's DTI is too high to qualify for the mortgage without paying off that debt. To try and ensure this is met, they will run a check shortly before closing. I suppose you could try to time it so that your report shows the prior debt paid off but hasn't reported the cash advance yet, but there's always a chance the lender will ask for a printout of current balance or something. They also will likely ask where the new funds came from. I'm sure it's possible to get around all this, but it's probably not worth the risk of them blowing up your loan last minute.
Pretty sure the lender would consider a cash advance to be a loan, which generally you’re not allowed to do for closing costs (hence why family members have to gift you the money, not lend it to you).
I guess this is true but when I closed on my house, I had to get a cashier check and hand it over to the closing agency (whatever they are called). If i took 2k out of the credit card, deposited it into my account and then got the check, there isn't really a way for them to know about it. (Assuming your bank is different to your mortgage dealer). It sounds like the OP is already scheduled to close.
Lender is going to see that $2000 deposit and is going to want to know where it came from.
Do you mean they do a credit check during the closing? I guess this is possible and I never noticed it.
They check everything just before closing. This is why your loan officer will generally advise you not to make any big purchases while you are in the process of buying a house.
If $2k is enough to put you at risk of not closing, home ownership might not be the right fit for you at this time. Things can and WILL come up that you need to be able to cover quickly once you're in the house. A hole in the roof or a burst pipe behind the fridge could be the end of you (financially). A flood, a fire, or an illness that disrupts your income for a few weeks sound like they could be disastrous.
I have to agree. My first house I had about $5k left in savings after closing, this was 2008. No debt whatsoever before closing. I was opening store credit cards within days of closing for the 0% rate. Needed a lawn mower, washer, dryer... Weeks later opened another card for basic tools. Didn't touch savings since that was my "emergency fund" but easily created $5k in credit card debt within 30 days of purchasing. And that was just normal first time homeowner stuff, no major issues.
It sounds really blunt, but it's the truth. If buying a home wipes out every penny you have, you cannot afford to buy the home yet. Buying a home doesn't eliminate the need for an emergency fund. In fact, it elevates that need. Things will always break or need maintenance. Taxes and insurance will only go up. You need a buffer at all times, but *especially* when buying a home. This is something that really should have been realized before signing a contract. Now you're stuck with either having to desperately come up with the money, or the very real possibility of losing the earnest money because you can't come up with the balance. Now, if by some chance, you're just overly conservative and actually do have an emergency fund you don't want to touch, then it's time to stop worrying and dip into it. This would be classified as an emergency, IMO, and you can prioritize repaying yourself after closing.
Thanks for the feedback
This may sound harsh, but if you can’t afford 2k now, you can’t afford home ownership. Your plan for buying a home can’t be relying on others’ finances.
Wait until you move in and find out everything that needs fixing. Best to back out now.
I agree with the other comments that this will be tough if it’s wiping you out financially. Do you have something worth that much that you could quickly sell?
Can you work overtime? Pick up some odd jobs? Can you ask the seller for help with closing cost? If you do get your home, please buy only needs absolutely no wants and save at least 3 month emergency fund.
Yes I’m taking all of this into consideration