Are You Still Approved?
You’ve been pre-approved for a home loan. You find the perfect house, you write the perfect offer, you’re accepted and you’re moving through to closing. Your new home is within reach. Simple as that, right?
Today we’re gonna talk about four different things that could make or break your real estate transaction. You the buyer have complete control over these items. We’ll talk about each one of them here.
Don’t Apply For Credit
The first thing some people don’t realize that can totally kill your transaction, is opening new lines of credit. We all go to department stores that offer you a new credit card. Or we need tires and they offer you an account. They offer us this great deal, apply for a credit card and receive 10% off or 20% off. You think, oh, I’m gonna save some money but you’re in escrow on a house and when you get approved you changed your debt-to-income ratio. Even if you don’t use the credit card.
Sometimes that won’t affect a buyer. But if you’re close to the margins that can really throw a monkey wrench in, could delay your closing or totally make it so that you don’t qualify for the loan anymore. So number one, do not open any new lines of credit.
Don’t Make Large Deposits or Withdraw
Number two, don’t make any large deposits that are not normal. If your paycheck is automatically deposited, that’s fine. You want your bank account to stay on what’s normal and average for you. If you sell something that’s a high dollar amount like a car, a boat and now you’re gonna put that money into your bank account, at the time you do it, you want a paper trail.
Underwriting is gonna go back and look through your bank account. They’re going look at every deposit and all of that. If you have a $5,000, $10,000 deposit and no explanation for it, it’s gonna raise a red flag. It won’t always stop your transaction, but it can certainly delay it or cause problems. So if you’re gonna sell a car or something large like that, make sure you keep a copy of the ad, a copy of the bill of sale and a copy of the deposit and send them over to your lender immediately. That way they have them and can avoid delays. Because three weeks down the line and you’re packing, you’re going to have lost it and you’re not going have it, and it’s going delay your closing. So number two, don’t make large deposits or withdrawals from your bank account.
Don’t Buy a Car or Bass Boat
Number three, kind of ties back to number one. We don’t think of it as a line of credit. Do not go buy a new car, do not go buy a new boat do not go buy anything like that that’s going to change your credit or your debt to income. Anything that adds payments or will change your debt to income and most likely your credit. Just because you think you can afford it does not mean your lender will see it the same way. Always talk to your lender before you do anything. This has nothing to do with being able to afford it or not, it has everything to do with your debt-to-income ratio and what your lender can approve you for. Additional payments could change your approval hundred percent. So don’t go out and buy a new car or a new boat.
Don’t Quit Your Job
Number four, and this one I’ve had happened several times. Don’t quit your job. If the boss has given you a hard time or you have another job lined up, even in the same field, towards the end of a transaction, it can cause problems. Hang in there, don’t quit until you’ve closed escrow. Then change your job. Because right up until the 11th hour, sometimes the day of closing the lenders’ underwriters will call to verify your employment one last time. Your employment is part of what puts you into the category of being pre-qualified. Even if you’re going make more money. If you don’t have the work history there it could blow you out of the water. So don’t quit your job.
The four things that you don’t wanna do during your real estate transaction, is open new lines of credit. You don’t want to have any large deposits or withdrawals. You don’t wanna go buy a new car, or a bass boat and you don’t want to quit your job. Those are my four number one things that buyers have done to sabotage their own transaction.