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It's a long way to sold!

12/2/2021

It is so exciting when people finally find their dream home. Or even the prospect of purchasing a new home engenders feelings of happiness, enthusiasm and dreams of what life will be like in their new surroundings. But it is a long way to SOLD!

In real estate, we are not legally allowed to say a home is 'SOLD' until the papers have been signed and the money has been funded, which means the title company can disburse the funds to the seller. Sometimes the amount of time it takes between finding the perfect house until the time the funding actually happens, can seem like an eternity.

Most closings take approximately 30 days, but with the current market and challenges with lenders, appraisers, etc., it can easily take 45-60 days until buyers can actually hold the keys in their hands. A lot of things can happen during that time, but one of the worst disasters are unfortunately caused by the buyers themselves.

When a lender initially pulls the credit and starts gathering the information necessary to fully qualify the buyers, they have a baseline. This gives the mortgage company an idea of what they are dealing with as far as affordability, credit score, debt to income, etc. While there may be a few 'clean up' items on their credit, many buyers are excited that they can 'officially' afford the home.

Often the temptation to shop and buy things for the home overtakes them and off they go. Most lenders and realtors tell the buyers up front to keep their purchases to a minimum, and make no major purchases until AFTER they close. Most people don't realize how much they can impact their credit, especially during the holidays. Shopping and putting literally everything on their credit card could negatively impact their credit. It is very easy to spend a few thousand dollars on Christmas, and if you are on the cusp of loan approval, it may be just enough to stop the process.

Sometimes the temptation to buy furniture or make other large purchases for the home because they will 'need' it when they move in, becomes too great and they end up with the purchase, but not the house. It happens all too often.

Why? Because lenders pull credit on purchasers just a few days prior to closing on a home and if their credit has changed, it could cost them their new home. Other scenarios are people who decide to put off making a payment on something so they can buy Christmas gifts. This late payment severely impacts the loan, and yes, I have had clients do that very thing. Then you have the year-end vehicle sales, the absolute last thing you need to do is to buy a new vehicle when you are waiting to close on a home. This is such a huge issue, realtors often share memes about it. That is one sure-fire way to ensure you will not be moving into your new digs.

JUST SAY NO!
We all have had it happen. We get to the check out and the clerk says 'Would you like to save 10% today?' A quick yes could blow your home purchase because the clerk just processed you for a new credit card. I saw a story on social media that told the sad tale of a home sale that crashed because of a $50 savings someone got because of a new credit card. The new card caused enough impact on their credit that the lender would no longer process the loan. This was 2 or 3 days before closing.

If you are in the process of buying a home, or even if you are looking for a home, and want to buy within the next few months, pay cash for Christmas. Don't make any major purchases and pay all of your bills on time. While you are in the escrow process, it is of utmost importance to keep everything as low key as you can so you have no unnecessary surprises right before closing. You can buy all of the new stuff AFTER you close, it will be fine, I promise.

Everyone involved wants you to have a Merry Christmas and to enjoy your new home. Make the choice to do without, so you can do both!

If you would like more information on this, please give me a call. I can help with some of it, or connect you with some amazing lenders to help you walk through the process.