Home Buyers beware of mortgage pitfalls. Many home buyers are finding it more challenging to qualify for a mortgage these days, as mortgage lenders have tightened their lending guidelines and underwriters are often triple reviewing loan files and checking the buyers credit frequently right up to the last minute and on occasion even right after the actual closing takes place and the documents are signed.
When we first meet, we have a talk with new home buyers about the mortgage process and what to expect. However, that is early in the process and lots of things happen between finding a home and the closing table. There are inspections, unfamiliar paperwork, time tables to meet, and the stress of moving. It is no wonder that many buyers forget our early warnings which usually go something like this: “Please be sure not to open any new credit cards or any kind of credit line until after you have closed and the deed has been recorded.”
Don't Apply For Additional Credit During A Mortgage Application
Each year we have buyers who forget this golden rule. Last year in December we had a client who was due to close right before Christmas. They were shopping in Belks and were excited thinking about spending Christmas in their new home. When checking out they received an offer from the Belk's cashier offering them an additional 15% off everything they were purchasing if they opened up a new Belks account and used it to make the purchase. Without thinking they said, “Sign me up”. Two days later we got a call from the Lender telling us this new account literally dropped their credit score one point below the minimum cut off for the type of loan they were getting and that the buyer and Lender were going to need time to work it out before we could close.
More recently, we had a client who was told by the Lender they were clear to close, they assumed this meant everything was done. They went out the day before closing and opened up a new Lowes credit card account to get an extra 10% off and then bought home improvement items for the house which they closed on the next day. They signed everything and they and the seller left the attorney's office. Just an hour later we got a call from the attorney's office that the Lender said they weren't sending over the financing funds because of this newly opened account. Again this got resolved and in this case the buyer and lender working together with the credit reporting agencies were able to do so in roughly a week, but this could easily have been avoided if the buyers had simply waited 36 hours before going into Lowes.
Home buyers need to remember that from the time you make your mortgage application until the day after you close your credit is likely to be monitored very closely by your lender and even the smallest change could have significant consequences.
Needless to say innocent mistakes like these can cause a lot of stress for everyone involved and the moral of the story is the Home Buyers need to beware of this common mortgage pitfall.
As Buyer Brokers we and the loan officers need to be more vigilant in explaining the pitfalls of today's lending environment to our buyer clients as we work together towards everyone's goal of seeing the buyer in a new home.
If you're thinking of buying a home in the Triangle area and would like to learn more about applying for a mortgage, get in touch with our team. We'll happily refer you to some of our preferred lenders and help you start your home search. Send us a message online or give us a call at 919-659-5173.
Posted by Larry Tollen on
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