Getting a home loan today is getting harder and harder, and home buyers who are unprepared could find themselves homeless if they misbehave while applying for a loan. Lending institutions now check, double check and triple check their applicants until the very last day they fund their loans.
A recent first time newly wed home buyer found out the hard way, how banks fears of having another foreclosure is making them pull their loans at the very last minute. This particular loan applicant went through about 35 houses, wrote 14 offers, responded to 10 counter offers, and finally! his offer was accepted on first place! Since he had done all the prequalification for the loan, he was informed that he did not need anything else, except to wait for another 3 weeks to close the escrow. He was so happy, that he decided to go out and celebrate with a bunch of friends... bad idea!
After a few drinks with his buddies, they noticed a furniture store across the street from the bar, they decided to offer some advise and help him pick the right furniture and surprise his wife with his purchase. His friends assited him with a lay-out plan to buy a dining room set, a large sofa with a couple of recliners, plus of course a flat 40+ inch T.V. A small down payment was paid and a credit was established. (ouch!) The idea was to move the furniture inside the house when escrow closed and surprise the wife when she opened the door and finds that the house come in with new furniture... (good intentions though.)
Needless to say, the wife was very surprised! She did not even got to see the new furniture... or the house for that matter! because the bank called the day after signing to tell them that the previously approved loan had been denied! The bank had run one more credit check prior to funding and found out that the FICO score went down because of the new purchases. No matter how hard they tried to fix things up, they did not get the loan, they were lucky their landlord help them stay as renters where they lived.
While applying for a loan, stay put and do not spend a dime on credit! do not cosign for anybody, do not apply
for anything that might generate even a simple credit check. Banks look at that behavior as bad business and will not hesitate to cancel everything on the mere suspicion that the buyer is not credit smart at such critical point.
The consequences for everybody involved in this transaction are devastating, a huge waste of time and money, that could have been avoided had the Realtor or Lender made a point to warn this first time buyer not to go shopping for anything while in escrow. I am making now this incident a must-tell story for all my buyers, it is a way to get this point across in a very clear and painful way, so they remember.
Antonio & Alexia Cardenas
"The Realtors In Motion"
CRS, GRI, E-Pro Certified. SFR (Short Sales, Forclosure Resource) Serving the east shores of the San Francisco Bay, Alameda county: specially the following cities: Castro Valley, San Leandro, San Lorenzo, Hayward, Oakland, Pleasanton & Dublin.
Visit us on line at:
www.listedbyantonio.com or call (510) 326-4263
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I always give this advice. I ready recently that there are now new rules in place requiring credit checks right before closing... so it is good to make buyers aware of this.
OOOHHHH NOOOOOOO!! Not a happy wife I am sure! While his intentions were certainly in the right place, I always make sure my clients understand not to do ANYTHING to jeopardize their credit prior to their loan CLOSING. A very valuable lesson to be learned by all!
The absolute FIRST thing I tell my buyers as soon as we open escrow is "DO NOT BUY ANYTHING", and for goodness sake "DO NOT USE YOUR CREDIT CARDS! Period. End of story. But I have seen it happen over and over again. Some people just don't listen.
Yes, Joan, Stephanie and Jean. This is pretty good advise for our clients. But, equally as important, is to keep reminding them throughout the transaction, all the way until closing. This happened to someone in my office. Who thought was closing an escrow, and then found out she was out on the cold too, because she thought it was kind-of-clear for everyone to know...
Antonio
Hey Antonio an Alexia that is a rough lesson. Some great advice, to bad no one told them soon enough.
This is truly sad. I wrote a post on this also. Who would have known. And I am sure the credit score couldn't have gone down that much. Any excuse not to lend money.