If you are about to buy a house, don't make major changes to your finances!

By
Real Estate Agent with Century 21 Redwood Realty, Arlington Virginia

There are many things you should have on your mind.  One of the biggest ones is your money.  I tell buyer clients, after you are ratified and have loan approval "Do not make any major changes to your financial situation."   Can I get a new higher paying job?  Well yes, that is allowed.  But be prepared to prove it umpteen different ways.  The bank is not going to take your word for it.  And if you do anything with your money - tell your loan officer about it first, and make sure it's not going to blow your loan.

Don't open new lines of credit.  Don't be tempted to get that furniture discount at Macy's.  Just wait until after you've closed.  The lender will check your credit again, and opening new lines could throw off your ratios.

Don't make a huge payment to anything.  Banks want to see cash in the bank. You were approved with a certain snapshot of your cash.  If it disappears, they are going to get nervous about your ability to perform at closing.

Certainly don't quit your job or take a lower paying one.  They will call employers right before closing to confirm you still work there.

Don't make any major purchases.  Now is NOT the time to buy a new car or boat.  Wait till after closing.

Sales are falling apart left and right (fortuately, not among my clients) out there due to banks' higher level of scrutiny and tight underwriting.  Follow the straight and narrow.

 

close

Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Tracie Cope 05/28/2011 08:01 AM
  2. Dan Edward Phillips 05/31/2011 08:22 AM
Topic:
ActiveRain Community
Location:
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Groups:
31 Days of May Challenge 2011
Agents who want REFERRALS!
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Ambassador
530,622
Lynn B. Friedman
- - - Concierge Real Estate Services for YOU - - - Providing SERVICE for Sellers & Buyers is our BUSINESS - Atlanta, GA
REALTOR ATL BuckheadMidtownWestside 404.939.2727

Dear Coral,
First, I love the flowers on your page's background.
Second, I just told a first-time -buyer this and NOW will send him your link.
Have a happy day -
Lynn

May 28, 2011 07:49 AM #1
Rainmaker
261,347
Coral Gundlach
Century 21 Redwood Realty, Arlington Virginia - Arlington, VA

Lynn, thanks.  I give this schpeel to my first time buyers all the time.  It's never happened to me, but I have heard tales.  A closer I work with alot told me about the client buying a car right before closing.  Bank canceled the loan.  Ouch.

May 28, 2011 07:53 AM #2
Rainer
207,696
Tracie Cope
Granville, Newark, Heath, Buckeye Lake & all of Central Ohio - Granville, OH
ReMax 360 - www.LCountyHomes.com

Great post Coral, I do believe I'll reblog.  A couple of years ago, I had a deaf client who put an offer on a short sale property - in the time it took to get the short sale approved, he took out a loan for an amazing engagement ring for his gal.  The deal fell apart.  I felt horrible because I obviously hadn't covered that with him. Communication was challenging to say the least!

May 28, 2011 07:55 AM #3
Rainmaker
253,277
Kathy Denworth
Century 21 Schwartz Realty - Islamorada, FL
Realtor in the Florida Keys, Islamorada, Key Largo

I have a property under contract and told them to not even WALK into a car showroom. I almost had a deal go south because the dealership ran a credit check before they would let them test drive a car. Just the fact they ran the check affected their credit.

May 28, 2011 08:00 AM #4
Ambassador
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Christopher and Stephanie Somers - Realtors - Philadelphia Real Estate
Realtor / Owner - RE/MAX Access - Philadelphia, PA

Coral - great post and super reminders for folks under contract.  With mortgage guidelines so tight any decline in a credit score could be the difference of that deal blowing up or not. 

May 28, 2011 08:04 AM #5
Rainmaker
506,131
Dan Edward Phillips
Dan Edward Phillips, Humboldt and Del Norte Counties, CA - Eureka, CA
Humboldt and Del Norte Counties, CA

Good Morning Coral, excellent input for buyers obtaining a loan.  Now if only they will listen!

May 28, 2011 08:45 AM #6
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Chris Ann Cleland
Long & Foster REALTORS®, Manassas, VA - Bristow, VA
Associate Broker, Northern VA

Making major purchases is definitely a no-no until AFTER the home is purchased.  And opening store credit cards in preparation for those purchases can be just as bad.

May 28, 2011 10:21 AM #7
Rainer
47,885
Jim Courtney
OklaHomes Realty, Claremore Oklahoma - Claremore, OK
GRI, AHWD

Excellent and worth repeating to buyers constantly! I tell every one of my buyers this and they still do it. I have had buyers come to the closing in a brand new truck...they nearly lost thier deal and their interest rate went up because they had to start over. My personal favorite were my buyers who bought a Rainbow vacuum (expensive I think). They bought a single unit, and this purchase alone cost them their new home through loss of financing. What, you couldn't wait for 30 days to do your floor??

Buyers will be wise to take your advice...DO NOT DO ANYTHING THAT CHANGES YOUR CREDIT UNTIL AFTER CLOSING!  :)

May 28, 2011 02:56 PM #8
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Tammy Lankford
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Your Lake Sinclair Expert (706-485-9668)

I recently had some folks stop by that were driving a brand new car.  I told them to get re-approved before I would show them prioperty.  They didn't understand why the approval prior to the car purchase wouldn't work.  Duh.

May 28, 2011 07:14 PM #9
Rainmaker
398,596
John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

I'm working with two people that changed their job shortly after signing the sales contract. I explained that they have to wait for a full 30 days at the new job. Luckily, we had enough time. It could have been ugly if they would have changed jobs closer to the closing date. As it stands, we are looking to close one next Friday and the following loan 4 days later.

May 29, 2011 04:51 AM #10
Rainmaker
1,251,921
Jay Markanich
Jay Markanich Real Estate Inspections, LLC - Bristow, VA
Home Inspector - servicing all Northern Virginia

But if you take out enough new credit cards, you might just be able to pay for the house.  Then drop the cards and keep your house!

Plan?

Look carefully at the eye.  It is winking...  see?

May 29, 2011 01:10 PM #11
Rainmaker
575,417
Valerie Zinger
House Proud Ottawa-Ontario-Canada - Ottawa, ON
Home Organizer

Coral:  Isn't it interesting what people will do right before completing a house purchase?  My favourite is the new car or all new furniture on credit.   YIKES

May 31, 2011 08:25 AM #12
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Coral Gundlach

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