Becoming a first-time homebuyer is the American Dream you’ve been waiting for your entire adult life. After months of shopping, you finally found the property you want. The seller accepted your offer and the home is officially under contract.
Now, why would you go and finance that new car knowing you have a house in escrow?
As a matter of fact, why would you make any type of major purchase right now? This is the time when the lender is patiently waiting to see if you make any rash moves that affect your debt-to-income ratio or credit score.
In other words, they want to see if you’ll make a move that may stop you from making your mortgage payments on time. Why would you mess that up?
6 Things NOT to Do When You Know You Have a House in Escrow
Nothing is set in stone… that includes pre-approval letters and an “okay” from a mortgage lender. There are many mistakes you can make to complicate closing and mess up your chances of becoming a homeowner.
Here are six things NOT to do after you already have a home under contract:
1. Do NOT Change Jobs
Your lender approved you based on employment history and/or income stability. Changing jobs puts you in the category of a new employee, making your income unstable. If you must change jobs during the mortgage approval process, make sure it’s within the same industry.
2. Let NO ONE Run Your Credit
Lenders don’t like to see that you’ve been running around trying to obtain new credit. To loan officers, this looks like you’re actively seeking new debt. Plus, each inquiry causes your credit score to drop. And that’s detrimental to buying a home.
So, do not get any new inquiries on your credit report after escrow opens.
3. Do NOT Ignore the Lender’s Requirements
Your lender may contact you or your agent about additional documentation requirements. Ignoring these requests will bring your escrow to a halt. And there’s no guarantee the lender won’t deny the loan altogether in the end.
4. Do NOT Make Friends with the Seller
Remember, you are in the middle of one of the most important business transactions of your life. What you and the buyer have is not a friendship. It’s a contractual agreement to do business together.
Emotions can run high for everyone involved. If you cross that line, you could lose out on buyer’s perks such as concessions and repairs. Basically, be professional. And do not mix business with pleasure.
5. Do NOT Let a Low Appraisal Freak You Out
There are times when appraisals come in low. Don’t panic. There are solutions to this problem. Talk to your REALTOR about your options. Maybe the seller could pay your closing costs or possibly lower the asking price of the home.
6. Do NOT Make ANY Large Purchases
As an Atlanta REALTOR who just watched a recent client’s home fall out of escrow, I can’t emphasize this enough. She went out and purchased a new car, knowing she had a home in escrow.
Her score dropped so low the lender denied the mortgage loan. Yes, she had been pre-approved. But that pre-approval was based on a specific debt-to-income ratio and a specific credit score.
When you make a large purchase, such as buy a car, your credit score drops substantially… immediately.
This “big money” commitment alters your credit rating by changing your debt-to-income ratio. When the lender runs your credit again at the end of closing, any new major debts and drop in credit score may cause the home to fall out of escrow.
Buying Real Estate in Atlanta: Don’t Try to Do It Alone
Your local buyer’s agent is here to help you find a home, make an offer, get it accepted and ultimately buy a home. Working with an agent gives you a mentor who consults you on the do’s and don’ts of buying real estate.
You need an Atlanta REALTOR with a track record of helping buyers find homes and keeping them on track during escrow. I am Kereen Henry. As your local ATL real estate agent, it’s my job to assist you in your home-buying process.
Give me a call at (404) 210-1674 to discuss buying a home in the Atlanta area. Or click here to contact me online now.