Here's the deal
Your credit will be re-pulled prior to closing!
Book it!
Bank on it!
Expect it!
Last month we had about 1500 closings and two issues came up prior to closing. One person had new credit because of a recent purchase and the other person had just "looked" into obtaining credit. The real issue is this. Don't do anything once you've applied for a loan. After you've gone to closing,
then you can go purchase items til they come through your wazoo, but until then....
Fogettaboutit!
Recently, I've seen companies getting bit in the butt by this new rule. Make sure that you're educating your consumer. As a realtor, assume that the lender won't educate the borrower to this rule, so you should.
Don't have your closing blow up. Don't look into credit until you've closed on your new loan!
If you choose, you can find me here:
NMLS ID#158606 
An Illinois Residential Mortgage Licensee
So true....I tell people:
Don't buy furniture
Don't buy a car
Don't pay anything off
Don't save money by using a credit card
Don't do ANYTHING without talking to me or the lender first.
Any agent who doesn't counsel a buyer in this matter should lose their license. Losing a sale isn't enough.
Put it in writing and have the buyer acknowledge it.
A lot of buyers do not realize this. They need to be counseled.
No ambiguity here, Larry! I love it.
Hi Larry-
I tell people that they can buy shoelaces and that's IT! Then we shoot for the fastest close (less time for changes). We are letting everyone know that lending changes almost daily and that they will have to be very conservative to secure their sale.
--Sara in San Antonio
Hi Larry -- Excellent advice. I had a buyer recently switch jobs and not tell anyone -- whew -- luckily it was a promotion.
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.
Karen....cash is king in the interim!
Lenn...that's so sexy! I love the way you take charge with your buyers!!!!!!
Ted...bingo!
Tanya...thanks.
Sara....you allow them to buy shoelaces? Wow are you generous! I tell my clients to show me a spare pair prior to application.
Chris....just goes to show you!
John....good points!
Larry,
You couldn't be more correct, or address a more important issue relating to residential home financing. As a former wholesale account rep, I constantly encountered situations where buyers were not told many things, including the need to freeze their credit during the loan application process, as lenders tightened their underwriting standards and investors required greater quality control over loans.
With help like your blog post, more and more realtors are understanding that the days of telling buyers that they can close easily and fast are gone! The best advice is to let your buyers know they should make application, include a overly complete file for underwriting, pay your bills on time, and don't mess with your credit standing until escrow closes and funds have been transferred.
Bruce Bills
www.ratewindow.com
I'm seeing a theme this morning on the AR dashboard.
People should always keep that "snapshot in time" credit status of the day they were issued their commitment.
Great words of wisdom. So true!
Larry - Isn't that the truth! We've had people stop on the way home from applying for their loan to "look" at a new car. Bingo. Another hit on the credit report.
Bruce...thanks for the comments. I'm grateful that others are out there trying to get this info out there!
Phillip...don't breathe until you close!
Sharon....I have one every blue moon...thanks.
Susan...Don't buy the car....."Mr. & Mrs. Homebuyer, Step away from the Car!"
This is such great information. I am going to reblog this.
Larry
Great advice, thanks for sharing the tips.
Good luck and success.
Lou Ludwig
Thanks for the post. I have a buyer who is convinced that buying a car won't affect his ability to get a mortgage. The guidelines for loan approval are very tight right now.... it's not 2004 anymore!
Good call Larry. They should teach this kind of stuff in school in my opinion, but until then it's up to all of us to educate our clients!
Great post Larry,
I have made a typed list of "things not to do before closing". I have made it a policy to give it to all of my buyers with the friendly reminder to adhere to this list or risk not closing. It goes in my buyers packet and I give it to them at our first meeting. I've even considered printing it in duplicate and having them sign one to keep in my file. I use it for my first timer buyers especially. It hasn't failed me yet.
Even when I have advisd client's, I have still had them go out and make a credit purchase. Fortunately we were able to keep the loan and close the deal.
I have to disagree with the "don't do anything". I had a client who just cleaned up a couple of old "mistakes" on his credit report and increased his mid-score some 80-points before closing and hence got better pricing. Woot.
Robert Boyer
WJB Home Loan
Investment Property Search
San Diego Real Estate Homes for Sale
Hi Larry. This has been preached forever but has only surfaced as a regular reality recently. It's kind of like speeding when driving. So many people "got away with it" in the past that most just don't get it now even with repeated warnings. Then when "it" happens to them there are 1000 excuses why they should be an exception... Thanks for the reinforcement!
.....And don't quit your job.
LOL
Seriously... Happened to a colleague of mine. Lady quit her job on the way to closing. Employment was verified before funding.
DOH!!!!!!!!
Larry the credit bureaus in my opinion are just a little over the top. That said, I do know that many cosumers are not aware of how the bureaus can detract from their score just by having a business do a check on them whether or not they buy the item. Ridiculous! I certainly will take your advice and make sure they don't even buy a shoelace. Ha Ha Great Post
Hi Larry, Isn't it amazing that consumers seem so clueless when it comes to this issue. An agent in our office had a buyer buy all new furniture and a car just prior to closing losing financing !
Phil....I love the "Things not to do b/4 closing." Smart!!!!!
Robert....that would be the exception.
Ann..... "KNOT" even a shoelace.
Bill....with Losing be the operative word.
Before entering Real Estate and exiting the mortgage industry there was a gentleman who figured he was in the clear and brought a brand new mercedes before closing. They pulled his credit 9 times just to find a "good" interest rate and needless to say... IT DIDN'T CLOSE!
Very good post and absolutely right. I always tell my clients to keep expenses low and don't apply for anything new just before COE. I've seen too many closings delayed due to increases in debt.
Thanks for the reminder Larry! I tell my clients not to apply for any credit cards, purchase furniture etc... until AFTER closing. You can wait 1 extra day for your home depot credit card, they will still be there!
Larry, perfect timing! I had a call this morning from a buyer on his way to purchase new appliances prior to his closing at the end of this month. He wanted to know whether to buy a gas or electric dryer. "Stop, turn around, do not go to Lowes." I practically screamed. His loan officer from another organization (whom I DID NOT pick) hadn't mentioned this to him. Poor guy, now he has to explain to his wife that the Realtor won't let him buy her a washer and dryer. Better the dog house for a night than a problem with the closing.
Thanks for the post! You should probably post this as a reminder every week or so.....I'm reblogging this one.
Amen! Amen! Amen! Think we will just print this and give to Buyers! Thanks Larry and congrats on a deservice Feature
I tell my clients lock up the credit cards and do not buy a thing on credit. Do not even let someone pull your credit until after your closing. Yes this include buying new furniture for the new house. Just wait until you move in. An extra week of using the furniture is not going to kill anyone.
Great post Larry. Just goes to show that lenders and agents really need to cooperate and communicate with our clients to ensure they get the best service.
Matthew....ouch!
Bryan...bingo!
Lori....they aren't going anywhere! They'll always be around.
Leslie....it's hard for me to remind everyone since the rule is so new. But, like anything else, it's becoming part of my script. You'll have to get your people to a good loan officer...wink, wink!
Al & Peg...thanks.
Roy...you're right on brother!
Larry.. some great advice. Something that should have been mentioned long ago, just in case things got delayed, etc, etc... but this is even more important than ever before. Good message to get out to others.. and a good reminder for the rest of us when speaking to a potential client.
Great reminder, we learned the hard way several years ago when a buyer/seller decided to nuy a new suburban on a road trip and their credit was pulled 20 plus times because of all the different dealerships they visited, their original great interest rate almost doubled, they had to hold off on the purchaee of a new home until they cleared up their credit.
Larry, you are so right! I make sure to tell my buyers this and so far I have never had this problem.
Jeff....well, it's out now. Thanks brother!
John....Wow...what a story!
Kim....stay on it!
Larry:
It is the perfect advice that once you have applied for your mortgage and you are waiting for your home to close - just sit tight on any purchases until after it all over.
great reminder... don't get bit by not preparing our buyers
This cannot be said enough times. Thanks for saying it again.
I recently had an underwriter request a written explanation from my buyer about a $14 personal check she wrote. Things are just a little too crazy right now.
I have educated my customers for years about this. This isn't anything new. Thanks however for the reminder.
Before I became a Mortgage Broker, I had a client I was working with go car shopping. He went to 7 different dealerships, had his credit pulled 7 different times, with no intention of buying a car. When he put the offer in on the house his credit had dropped so much he had to wait 6 months to buy. THe public really needs to know this stuff. Good information. Thank you.
HA! TAKE CHARGE??
You bet! I work on a contingency fee basis. No close, no fee.
You bet I take charge.
I tell every buyer I encounter to not do anything whatsoever to their credit score. Don't buy furniture, a new car, nothing. I even tell them to pay cash for gas and dinner, just to be on the safe side.
I had a buyer quilt her job a week before close (she wanted time off to pack and get ready for the move) I made her call and get her job back, lucky for her the boss had not turned in the papers to HR so she was good. She stayed a month and then changed companies.
Yes I had told her NOT to buy anything etc..... She showed up for closing with a pickup truck loaded with new furniture- "It's OK, we put it on the credit card, that shouldn't show up. " cheryl(sometimes you just want to beat them)willis
all good information here for sure. I'm bookmarking this one.
Patricia
Oh man. Twice this year GROWN UPS have done this "to me". Moved INTO the property prior to close. We overcame the issues but I can imagine what would have happened where the decision makers didn't have a little leverage.
Lenn...you crack me up! I'm withya though!!!!
Cheryl....that's brutal!!!!
Ken...pretty tough stuff. Rough for sure.....glad to get through it.
The loan officer should educate their customers on this! Will save alot of headaches in the end.
Great post Larry!
lol...no joke! I tell my clients that from the day of contract signing till closing they work for the lender!
Those underwriters are running our lives.
Don't buy anything.
No Barbecue,
No Appliances
No Lawn Furniture
Not even a Bed.
Wait till you hear the word "Funded"
Then splurge all you want.
Michele....they should...but do they?
Damon....good M.O. and great approach!
Ken....bingo!
This is great information for home buyers and people who are thinking of buying in the near future. great blog Larry.
Larry,
I always tell my people this. After you're qualified,,,buy nothing!
So basic, you'd think it wouldn't be necessary to point it out - but I always do and big time!
Great point about how blunt we need to be with our buyers. This advice needs to be stated boldly. Not amongst a thousand other directives.
We have a list of items that we tell our clients to hold off on doing until after closing but we need to make sure they take it to heart.
I think I may change the list as I like your advice better...don't do anything until after closing!
Larry, this is very good advice. Education is key here. Thanks for the reminder.
Don't give the paranoid financier a reason to cancel the approved credit.
You are sooo right. The lending practices are so tight these day. There is no room for purchasing anything from the time of contract, to the time closing occurs.
It is amazing how some people do not get this. Really. These days keeping those scores up is crucial. Thanks for this great post.