Don't change a thing until your escrow closes.
What does that mean exactly?
- Don't charge anything on your credit cards
- Don't get married
- Don't get a divorce
- Don't purchase a car
- Don't change jobs
- Don't start attending school
- If you're attending school already, don't take out additional student loans
- Don't borrow any money
- Don't retire
In short...DON'T CHANGE ANYTHING.
Why not? Underwriters are checking their list and checking it twice. It is becoming common for an underwriter to rerun credit and do additional verification of facts right up to funding. A little change, like deciding to retire or purchasing a car could send your underwriter into paroxysms and bring your escrow to an untimely death. In order to keep your purchase from becoming a dead escrow, keep your situation, not just financial but everything, the same as it was the day you completed your loan app. If you HAVE to change something, call your lender and ask how it will effect the loan BEFORE you actually make the change.
Please take this to heart. The loan process has become a mine field. Lenders and banks, once a permissive lot who gave out money to anyone who could fog a mirror have gone to the other extreme and now want documentation, verification, attestation, authentication, certification, confirmation, information and substantiation and they may want it more than once during the loan process.
To repeat, don't change anything with your life situation during your escrow. Keep your situation the same throughout the escrow process and things should go relatively smooth at least as far as your qualifying for the loan goes.
There are other mountains to scale during the escrow process for instance the appraisal...the grand Pooh-Ba of the escrow process. We'll save appraisal pitfalls for another day.
Thank you for stopping by. Your comments on this post are welcomed and appreciated.
No one sold more homes in Del Norte County in 2009--*both in number and volume--than Fran Gatti. Put Fran to work for you!
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Hi Fran - This has always been excellent advice, but now more than ever, since the underwriters are now usually requiring that lenders pull another credit report just before closing, and if it has changed, it could make the borrower ineligible for their loan and the deal falls apart.
It happened to a client of an agent I know, and now they won't be able to buy for awhile. They thought it would be a good idea to buy a new refrigerator, stove and dishwasher to install in the house they were buying to replace the ones in the house, but they bought them before escrow closed - bad idea!
This is such great advice!!!!!!!! Thanks for sharing. I will re-blog if you don't mind. I wrote one recently on the same subject, just a checklist, yours is much more thorough. It seems like this is common sense stuff, but far too often, people do things that negatively affect their ability to close the loan. If only they knew beforehand!!!
Fran: You'd think it'd go without saying but it's a good idea to review it with every buyer as they may do something wacky on a whim.
Fran, All common sense, but people tend to forget.......definitely good advice..suggested for a feature!
Fran, I know this has probably happened to many of us, where our buyer went out and did something stupid. Even after educating them, they will go out and do something stupid. I had a buyer use their gift money to get things for the house before we even closed. DUH!
It is a mine field and the buyers need all the information they can get to manage thru to closing!!
How many time have I heard stories about someone who goes to the closing table and tells the attorney that they just changed jobs...or the husband that bought a nice shiny motorcycle before closing. Great advice! I have something similar to this in my buyer counseling materials but I may need to revamp it to enhance the bluntness of the advice. I love how direct you are!
Fran, excellent and straight to the point post.
I recommended it for a feature, and will reblog to my community.
Great information. True now more than ever.
Yes, yes, yes. I went a little overboard one time with this lecture. My buyer asked if it was OK to still buy groceries.
Hi Fran, I'm not an REA but I've been at the closing table enough times and have always followed your wise advise.."Don't change a thing until your escrow closes!"
I give my buyers a long list of things not to do during the process. I wish all of them followed the advice. Have a great Thursday!
Amen! This is an awesome check list for buyers!
Great post-I have been in lending for years and it is imperative in today's lending world!
Last year I had client buy not 1 but 2 new cars and it was my fault that the loan got denied. They admitted that they understood that they were told not to buy anything but I was mean because I didn't understand her reasons for needing the new car.
What really happened was her husband screwed up and bought a new car, so she decided to do the same.
This is a popular trend today...just suggested another post on the same subject. If only our clients could really get this through their heads.
In a market in which many transactions are short sales, it is a real challenge for the buyers to avoid any change in their financial situation that might result in a problem with their loan approval. When buyers have to wait months for an approval on a short sale, it is difficult for them to remember to avoid any actions that will have a financial impact.
Of course, when the approval finally arrives and they plan to buy appliances for the new house, they really need to be reminded to wait until escrow closes unless they are paying cash for the new appliances.
You nailed it, Fran. An underwriter just asked my buyer to sign a letter confirming that she hasn't taken on any more debt... and she hasn't. So I guess this was just a preemptive strike on the part of the underwriter.
Don't die!
You said:
"If you HAVE to change something, call your lender and ask how it will effect the loan BEFORE you actually make the change."
Best advice for a borrower in this unreliable lending climate there is.
Fran - today that advice is more timely than ever. Underwriters are checking, double checking and then doing it again right before the actual close. Great advice and reminder.
Hi Fran -- I had a buyer change jobs 2 weeks before closing -- lucky it was a promotion -- nerve racking while it went through underwriting again.
"If you HAVE to change something, call your lender and ask how it will effect the loan BEFORE you actually make the change."
I gave this advice last weekend to a buyer. Great blog - posting for those in my area too!
And leasing an auto falls into this category. Don't lease a car!!
Fran.....it appears that I've copied you with my feature. (If you wrote after me then you'd be copying me). I wrote on this a bit ago and read that this was the theme of the day. Needless to say, great post with the most obvious points that everybody seems to miss. Great job!
Great post Fran. This is a subject we cover in our initial buyer's consultation meetings.
Good advice and often overlooked by zealous buyers busy planning lives and not paying attention. A gentle reminder after the offer is accepted usually does the trick.
Ok, how did you find a photo that perfect? What steps did you take? It's very clever and it's a great Post!
Excellent advice and straight to the point. In today's loan market making changes during the escrow will kill the purchase in a heart beat.
nice reminders... we need to educate our buyers so they don't hurt themselves after their deposit is in jeopardy... don't rely of the lender to do this!
This is the second feature of this conversation today and it is so true,
I tell buyers till I am blue in the face, don't spend a dime, don't buy a barbecue, don't buy any appliances, don't do a thing until you hear the word "funded". The underwriters are controlling our world these days.
Fran - this is excellent advice, and these days it seems to be even more important. You advice to check on the potential impact of a change is spot on - sometimes life gets in the way, such as a layoff.
Jeff
Fran, great points and worth a re-blog.
I have had this happen because they could not WAIT to get the new furniture ordered and delivered. It was after all, two years with no interest or payments, so they did not see the harm. What a nightmare! Very well written!
Keep smiling,
Karen
Hi Fran, great advice for homebuyers that might not understand the ramifications of even buying furniture as Karen mentioned. And I've heard of lenders doing a credit report the day before closing, scary times.
*makes note--no changes until the house is OUR house*
Fran -Great advice that cannot be stated enough. There are enough things that can make the process difficult but preparing the buyer upfront will take some of those uncertainties away. ~ Doug
Fran--great advice and reminder...even to those who have been told. A few years ago I had a couple who I had warned about many of the 'changes' you have listed and then they told me they just got back from furniture shopping and had purchased a sofa and loveseat!! Had them reverse the sale immediately.
Sorry to everyone that I have not acknowledged your comments. I have been struggling with computer issues these last few weeks and think I may have it under control now that I've purchased a new computer, upgraded to a new operating system and such.
I had no idea this post was featured and that I had all these comments (I have to find out why I'm no longer getting emails when someone comments on my post. Sigh...it never ends). Thanks to all of you who reblogged and/or commented. I wrote this post after a disastrous situation a colleague experienced. They did end up getting some sort of waiver but it was touch and go and considering the years it took off the buyers lives and the selling agent, I think the buyer who made a life change would say it wasn't worth the grief it caused.
I have begun counseling EVERY client, even if they do not intend to purchase right away, to see their lender, get approved and call their lender if there are any life changes or costly purchases that have to be made to see how it will affect their loan. I have the sweetest client who deferred her student loans thinking the added money would help her get qualified for a bit more home. Umm no. Maybe in 2006 when all you had to do was "state" your income, but those days have come and gone. Lenders don't care how long you can defer, bottom line, they are counting the income against you, as they should IMHO.
Agents who do the work of educating their clients before the transaction even starts tend to have a very good ratio of escrows that make it to the closing table. Having a really good lender makes all the difference.
Have a great weekend and thank you again for your comments and re-blogs.
Great advice! Now if we could take their credit cards away and their pens so that they can't sign their name until closing!