Is there a magic number?
So I have been looking at, and thinking about purchasing furniture lately. We need a lot. Looking to purchase:
- Kitchen table & chairs - seating for at least 6
- All new family room set (couch, love seat, 2 end tables, coffee table)
- Living room furniture (couch, accent chair, a couple tables)
- 2 new bedroom sets for kids
- At least 4 area rugs
- office desk & chair
That is what I can think of off the top of my head. Anyways - the point of this post is...is there a magic number or ratio that the mortgage company (NVR) wants to see in your bank as cash on hand? I have the remainder of our down payment and closing costs budgeted separately from these purchases. We will be paying cash for all of this furniture and have budgeted accordingly, however, we will seriously be depleting our accounts of liquid cash on hand. So at closing, is the mortgage company looking for a certain number or ratio of cash on hand? For example 5x or 10x the monthly mortgage payment, or your monthly income? I know I can reach out to our loan officer, just thought I would reach out to the blogging family first :)
I have read other "advise" columns that have said DON'T BUY ANYTHING BEFORE CLOSING...but most of that mentioned new cars, new loans, credit cards, etc., but we will not be putting this stuff on credit. The furniture store said it could take 3-5 weeks for the stuff to come in once ordered...so I have to wait 6 months for my house to be built...then another 5 weeks before I have any furniture...not a fan of that!
Let me know if you know of, or have heard of this magic number!! :)
I'm sure they see this all the time. Nearly everyone who moves into a new house must buy something--at the very least appliances and window treatments. I would suggest talking to your mortgage person and see what she/he recommends. Also, I imagine some of those can wait until after you move in. Anything upholstered takes time to order, if you are choosing special fabrics, so I might see about ordering those now, and waiting on rugs and office furniture, which likely only takes a week or so to be delivered. Just a thought!
ReplyDeleteThat is a good point about the fabrics...I guess I should figure out what exactly we want, and then how long each item will take. Family room furniture was the top of our list, fridge, and washer/dryer. Everything else we could "make do" if we have to until after we close.
DeleteWe are in basically the same situation with the furniture. I am not sure about the "magic" number, but I am a worrisome person by nature. I have read on some blogs where there were some last minute boosts in fees and I want to be sure that I have everything covered there before I purchase any of the furniture.
ReplyDeleteI also take into account all of the other items that I need to purchase or may need to purchase that I am not thinking of before moving in. This is everything from curtains, ceiling fans, and towel racks to light bulbs and grass fertilizer. Never know what is going to come our way for necessity.
I know, I can't help but worry! I have been reading these "stories" of people who couldn't close because their financial situation changed...and of course worrying how much money do I have to spend for this to be the case?!
DeleteI'm not sure of a magic number either...if you speak with your LO and find that this number exists...please do share!
ReplyDeleteHowever, like you, I have budgeted separately for different items. I have savings, I have a 'house' account for closing cost, and I have an account where I pay bills. I use the 'pay bills' account for all types of purchases (outside of actual bill paying). For instance, I currently have furniture in layaway - I use this account to make layaway payments.
I think that as long as you are using cash on hand for purchases (and not opening credit), and you aren't completely wiping out your account for closing, you should be ok.
I'm gonna ask about the magic number, and I will let you know Stacey!
DeleteWe are waiting to buy the major stuff until after we close, but that's because we want to use our credit card to get cash back and just pay it off right away, I have a separate bank account from my husband and I'm not on the loan, so I was able to get a new Sears card to buy our fridge and saved another 5% and just paid it right off, but the new sofa, the W&D, dinning set, it's all going to get purchased after close, we will have to wait a few months though for delivery on some of it :( so that is the down side... but we will get a few hundred bucks back by using the CC instead of straight cash, just something to consider!
ReplyDeleteThat is working good for you Rachael! We may just use our air miles card too and pay it before we get the statement, so it never shows as a balance on our credit report. Something for us to think about...
DeleteIf paying cash for a few items and you'd still have enough for closing, plus a few thousand (in case there are any surprises) I'd think you'd be good. We talked to our LO and he mentioned that nothing outside of the norm would raise any flags. The main thing with the bank accounts is proof the checks we wrote to RHs cleared and that we'd have enough cash in-hand for closing costs (minus our deposit). I figure we eat out quite a few times a month so buying a $2000 appliance after saving for 2 months wouldn't be much different as long as we haven't been eating out as often those previous 2 months.
ReplyDeleteAs others mention, I'd just talk to your LO to see his/her experience. He/she would know anything that raised a red flag before and caused issues w/ financing. I'd also stress that you'd be paying cash for these items.
Good point with that dining out scenario. I was thinking about something like that too...if we were planning on saving $XX before we close, and as of right now NVR isn't considering that amount...it wouldn't even matter if it was spent instead of saved :)
DeleteWe also asked about paying cash (or through our check card) for large expenditures because our house is now scehduled for delivery around Ocotber (pushed from late summer) and we definitely want to do some kind of vacation this summer.
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