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Put the brakes on spending

Those purchases could prevent you buying a home

Posted: November 24, 2013 2:00 a.m.
Updated: November 24, 2013 2:00 a.m.

Any financial transactions before escor closes on a house can kill the deal. Above, a Tesoro del Valle home in Valencia sold successfully. Realty Executives Valencia/Courtesy photo

When in the process of buying house, lock the credit cards up and avoid making any large purchases say Santa Clarita Realtors.

Even if the mortgage lender is satisfied with a buyer’s employment and financial status, tighter requirements for lenders lead them to routinely check on a buyer’s status right up until closing.

Any job change, loss of employment, new credit account or purchase may result in a buyer’s loan approval being delayed – or cancelled outright.

In today’s market it is not unusual for the lender to run and rerun the clients’ credit multiple times throughout escrow - sometimes even the day before funding, said Connor MacIvor with RE/MAX.

“We have had buyers who bought furniture for their new home on a credit card and had it delivered to their current home,” said Michael Regilio with Realty Executives. “The lender pulled the credit report for closing and cancelled the loan.”

Then buyers had the new furniture and no place to put it, Regilio said.

MacIvor has had similar experiences.

“We have had deals fall apart over a trip to a car dealer when the client’s credit had only been run and they didn’t even buy a car,” MacIvor said.

Dwight Hawkins with Realty Executives said his wife, Debbie, always tell buyers “it’s easier to buy a car after a house, than buy a house after a car.”

Even an auto lease can affect a buyer’s credit at the time of closing, Hawkins said.

“We have even had clients put things on lay away and the store said it won’t affect anything on their credit and then - bam! - it hits their credit,” he said.

Buyers don’t understand the complex process involved with loans, said Kathy Salisbury with Triple D Realty.

“I utilize a buyer questionnaire that I use with all my buyers and attach a Do’s and Don’ts list for them,” she said.
Realtor Robert Mickalson once had a buyer in escrow that purchased a brand new Mercedes Benz.

“The lender caught it and the purchase almost fell apart,” Mickalson of Realty Executives said. “Luckily the buyer had just enough income to justify the new debt to meet the lenders maximum debt to income ratio guidelines.”

Buyers need to consult with the lender before making any kind of financial transaction whatsoever, Salisbury said.

Even the upcoming holiday season could put potential buyers at risk.

“Some buyers could buy holiday gifts and run up their credit cards to the limits and it could factor into their qualifying,” Salisbury said.



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