Paying your closing costs with CLOC

[Anonymous]

Curious is this possible? I have a NFCU CLOC of 15K. I was trying to determine how much cash I could put towards eliminating debts to get my DTI as good as possible. Seems like I'll have to make sure I still have some cash in savings for earnest money and closing costs,

Then I realized at the closing everything is pretty much set in stone I don't think the bank would care about your credit or debts anymore. So could you use a CLOC credit or something like that at closing?

[CreditInspired]

Yes, the lender will most definitely still care about your credit and debts. 

No, you can't use a CLOC credit or something like that at closing because you're taking out a loan and that has to be counted in your DTI.

And finally, a LO wants to see that you have funds available for down payment, closing, etc. prior to closing. They also might run your credit again on the day of closing to ascertain whether any new credit was obtained. 

[newmomnewme]

@CreditInspired Even if the CLOC is already opened and available? It wouldn't be considered new credit right? 

@Anonymous I'm in the same boat, used most of my savings to pay down debt to get a better DTI, scores, and rate.

[Citylights18]

While putting some $$$ on the CLOC will cause a minimum payment that will hurt your DTI it shouldn't hurt it very much. 

Plus it will have a delayed reporting effect on your credit.

Unless you are sticking your neck out on a mortgage I wouldn't worry about it.

[CreditInspired]

---

@newmomnewme wrote:

@CreditInspired Even if the CLOC is already opened and available? It wouldn't be considered new credit right? 

@Anonymous I'm in the same boat, used most of my savings to pay down debt to get a better DTI, scores, and rate.

---

Bottom line, you cannot borrow money for closing costs, down payment, etc. 

You have to ask yourself a question--is using the CLOC worth losing the mortgage?

My question--Why take the chance? 

[Anonymous]

Hopefully I won't end up having any closing costs I can't just roll into the loan. I think I'm going to leave $5000 in cash for earnest money. I'm still a few months out so mostly I'm just trying to consider all my options now so I'm in the best shape possible. I think the consensus here is probably correct that you cant just write a CLOC check. In the past the only hard pull I got with my mortgage was when I first got approved maybe they do soft pull closer to closing and if they don't see new debt the never bring it up idk. Also I've always had the cash in my account for closing cost which they've always asked for statements and verified what funds I have. I never had them question how I was paying my closing costs but that may have been since I always had sufficient funds. That's what made me curious about all this since I knew I'd get me keys before that CLOC check would even get cashed. Thanks for the replies.

[polian]

---

@Anonymous wrote:

 That's what made me curious about all this since I knew I'd get me keys before that CLOC check would even get cashed. Thanks for the replies.

---

Cash brought to close is paid with wire transfer typically. Also acceptable but less common these days is cashier's check or certified check. What you're mentioning above isn't even possible.

[Citylights18]

---

@CreditInspired wrote:

---

@newmomnewme wrote:

@CreditInspired Even if the CLOC is already opened and available? It wouldn't be considered new credit right? 

@Anonymous I'm in the same boat, used most of my savings to pay down debt to get a better DTI, scores, and rate.

---

Bottom line, you cannot borrow money for closing costs, down payment, etc. 

You have to ask yourself a question--is using the CLOC worth losing the mortgage?

My question--Why take the chance? 

---

CLOC exists to cover overage to your checking account.

If your closing costs are 3,000 and you have 2,000 in your checking and you are paying your close using that checking account, 1,000 of over draft ends up in your CLOC.

[dragontears]

Please be aware that one of the many, many documents you signed states that you are not going to use borrowed funds in acquiring your new mortgage.

You are also required to provide bank statements showing ALL the funds for down payment and closing costs are present shortly before closing. 

Instead of trying to play games with borrowing money from a LOC for closing, just use the money that you have saved and AFTER closing pull $ from the LOC if you need it.