Are you getting ready to buy a house? The financing portion of the home buying process can be one of the trickiest parts. Today I have five tips on things to not do between the time that you get your pre-approval letter and between the time that you close on the property.
Hi, my name is Johanna Dueren. I’m a real estate agent with Circa Properties here in beautiful St. Louis, Missouri. Today I have five tips on things that you should not do between the time that you get pre approved for a mortgage and between the time that you close on a property. During the home buying process, the financing can be kind of overwhelming sometimes for people and a little bit confusing. The lenders are going to be scrutinizing a lot of your personal finances. They’re going to be looking at how much money you have. They’re going to be looking at your credit. They’re going to be looking at your debt to income ratio, lots of things that can determine how much you can be approved for and the interest rate you can be approved for or if you can be approved at all. There are a couple of things that people can do between writing the contract and between closing that can put closing in jeopardy and screw things up. We’re going to talk about those today.
Number one, do not make any large purchases between the time that you are pre-approved and the time that you close on a property, or between the time that you write an offer on a property and the time that you close on the property. Why is that? If you make a large purchase, large enough that, say, it throws off the debt to income ratio that the lender was looking at, you could officially no longer be qualified for the loan. Also, if you make a large purchase that takes funds out of a verified fund account that the lender has already verified that you have those funds before closing, then it could cause the lender to not fund the loan.
What happens right before closing is the lender will often go back in, re-verify funds, re-verify your credit. If a large purchase comes up on either of those things, it may throw some of your ratios and numbers out of whack and then you no longer qualify for that loan. That can be heartbreaking when you are within days of closing on a property. Number one, do not buy any large purchases.
Number two, do not change jobs. When you talk to the lender the first time, and you got your pre-approval, and then you got your house under contract, the lender took the information that you gave him or her, which included your employer, and how long you’ve been at your employer, and what income you make, and used all of that to give you your pre-approval. If you have changed all of that, then it is likely that it could cause problems with the loan. I will say this: two things. One, if you are moving into a new city and you’re starting a new job, you can often get your pre-approval letter just based on a letter from your employer. That wouldn’t necessarily qualify.
Also, if you are getting a new job that’s going to pay you more money, if you’ve been offered the position, what I would do is contact the lender. Let the lender know about the new position. Let the lender know about the increase in your salary. That could end up being okay, but keep the lines of communication open with the lender. I wouldn’t accept the new job until the lender basically gives you the thumbs up or have a conversation with the employer and just say, “Hey, can I put this off until after closing? I’m getting ready to buy a house and that closing is two or three weeks from now.” A lot of times, if they want you to work for them, they’ll wait until after that happens. That is number two, do not change jobs.
Number three, do not move banks and do not move large sums of money around without communicating with the lender. When you had your initial meeting with the lender or when you got your pre-approval, they looked at the amount of money that you have in the bank, just like in number one, and they verified the funds that were in there. If you now start moving all that money around, then the original terms that your loan was approved on may no longer be a thing. If you need to move money, for example, for your closing costs or for your down payment, have that conversation with the lender and make sure that the lender knows from what bank to what bank those funds are coming from. If you are changing banks, if you’re thinking about changing banks, just wait until after closing. There’s no reason to rock the boat on all of that right now. The lender is using all the information that you gave them, so if all of that changes, then your loan approval changes as well. Do not move banks and don’t move large sums of money around.
Number four, don’t change your marital status. This has a little bit more to do with the title portion of purchasing a home than it does with the lending. It has a little bit to do with the lending as well, but the way that you are taking the title on the property, the way that the title is going to be given to you, how it’s going to read has to do with who you’re married to if you’re married or if you’re not married.
Between the time that you write the offer for the property and when you are closing on the property, if that is about to change, if you’re going to get married, or if you’re separating, or if you’re getting divorced, wait until after closing to get all that done because if the information is different between when you wrote the offer and on the day of closing, it’s going to cause a problem with the title work. The title company during the closing process will ask you those questions. They’ll ask you if you have recently been divorced. They’ll ask you if you are getting married. Hold off. Just wait until after closing day to make sure there are no issues with title on that.
Last, but not least, number five, do not take advice on the purchase of your home from somebody that is not a professional. This is one of my favorites. There are many professionals that you’re going to be working with throughout the process. You’re going to be working with your real estate agent. You’re going to be working with your lender. You’re going to be working with your inspector. All of these people are professionals. You have hopefully done a little bit of research. You maybe got the name of one of these people from somebody else. The reason that you have these people is because they do this for a living. They do it every single day.
I can’t tell you how many times I have seen clients, had some of my own clients, or know of other agents who’ve had clients that have gotten really, really bad information from a family member, from a friend, from a neighbor that is just not true. Whether it be about the market, whether it be about the lending process, whether it be about the home that you’re purchasing, take all of the advice that you’re getting from the trained professionals that are working with you on the transaction.
Your Uncle Ed does not know nearly as much about the real estate market as he thinks he does. Your neighbor, Jane, does not really know much at all about the inspection process. I know when you’re in the process, you’re talking with people, you’re excited and everybody wants to give you advice, but I would say this is probably my biggest piece of advice. Talk to the trained professionals. What they’re telling you is accurate. What Ed and Jane are telling you most likely is not.
As you move forward in the deal, you will have a ton of questions and that’s okay. You’re supposed to, but make sure you are directing your questions at the right person. If it’s about the process, contact your agent. If it’s about the loan, contact your lender. If it’s specific questions about the inspection or something about the house, contact your agent and the inspection person, but go to the trained professional. Don’t rely on Uncle Ed. Uncle Ed doesn’t know. All good things to not do when you are getting ready to purchase a home. I hope this information was helpful. Please subscribe down below. I put out new videos with new content every week and comment. If you have a comment, if you have a question, please put that down below too. I will get back to you as soon as I can. I hope this was helpful.