You Made It!
After an involved process of digging up all your financial information to provide a lender, they pre-approved you for an amount that certainly fits for you and you call your real estate agent with the news and y’all make plans to go shopping. FUN!!! Fast forward to that moment when you make an offer and later get the call that it has been accepted! HOLY MOLY! After all, it has taken a lot to get to this point and you are elated beyond description. You pour yourself(yes) a celebratory cocktail and you start dreaming of your new life. After all, hard part is done… right? Don’t be so comforted by that cocktail I say! Hard Truth – it’s never over until those darling little house keys are in your hands.
The Accidental Saboteur
Sooooooo many things can happen from the time your offer is accepted to the time you get those long awaited keys. I won’t get into that because there are simply too many to write about here without causing your eyes to start bleeding. Relative to this conversation, lenders have denied a loan on the day the buyer was supposed to get the keys to their new home. WHAAAAT? Why would a lender EVER do that!? Simply put, it was because from the time you were pre-approved to the time your loan went to an underwriter to give a final stamp of approval, something changed your lend-ability in the eyes of the lender! This HAS happened and it is a VERY unfortunate situation (not to mention stressful!) on the day that you should be closing on the home to discover the lending institution will not go through with your loan. YIKES! Did I mention this is stressful? How did this happen? Well that nice new living and dining room set you just purchased on your credit cards because they were ‘perfect’ for this new home actually caused the scales to tip out of your favor. This is such a nice, straightforward example. In reality, people have financed cars, gone on very expensive vacations, and maybe even over-drafted in their bank accounts one time too many.
Put Yourself in Financial Quarantine
How do you avoid this jaw-dropping scenario that is guaranteed to put you in a downhill spiral of emotional instability? Simple – place yourself in a ‘financial quarantine’ from the time you get pre-approved (maybe even sooner) to the moment your agent is handing you the keys to your new home! Do not do anything that will have a negative effect on your credit… NO EXCEPTIONS. When you get pre-approved, it is no time to celebrate and lose control of your money. On the contrary, it is the time you REALLY must lock your finances down! A pre-approval is NOT the final say. Within a few days of closing, the lending institutions WILL RE-EVALUATE your financial life one last time to make sure they are not getting into anything regrettable and, if there are no red flags for them, will release your funds to finance the purchase. If there are red flags… well… you might have just lost the farm. ALWAYS remember that when you are getting a home loan, you are asking someone to lend you a large amount of their money and they need assurance that you are not in the business of making bad life decisions. You should ALWAYS discuss with all your agents on how to maintain a clean financial bill of health until the day those keys are yours!
Here are some other tips that will keep a lender happy:
– Do not change employment status
– Do not by large ticket items like vehicles, furniture, etc.
– Don’t spend that extra money you have
– DON’T OMIT ANY FINANCIAL INFORMATION
– Do not shift large amounts of money without discussing first with your lender
– Don’t change bank accounts
– DO NOT CO-SIGN ON A LOAN
Do you have any burning real estate questions? I am always happy to help! Please visit my website: www.colsenrealty.com to contact me.