The other day I received a call from a lender saying “Good news, the loan is approved. We are now ordering the appraisal.” If they left the same message for the borrower, they might think the loan was a done deal. The truth is, the loan has only begun, and it is confusing. Let’s talk about confusing statements lenders make to buyers.
Confusing Statements Lenders Make
Just recently a buyer quit her job because the lender told her she was approved for the mortgage. On the day of closing the lender reverified employment and found out she left her job 3 weeks ago. Her family lost the house and has no place to live and the seller must put their home back on the market and find a new buyer.
These are true stories, and they happen more often than you think. Real estate agents can tell you stories about deals they’ve lost because the buyer did something after pre-approval to cause their loan to be denied.
When you hear the words loan approved, or clear to close, the deal is not closed. Many lenders have a final compliance department that catches new credit items, or employment issues up until closing. I even saw a loan pulled after closing. The buyers had clear to close and closing instructions were sent to the tile company. The wire never arrived from the lender because they found something right after signing.
10 Helpful Tips
- Do not buy a new or used car until your home loan is closed
- Do not purchase furniture for the new home or home improvement items on credit card prior to closing on your new home
- Never co-sign a loan if you plan to buy in the next few years, and certainly do not do so while you are purchasing a home
- Keep credit card balances low through the closing
- Do not cancel credit cards unless the lender asks you to. Believe it or not, established available credit can help you
- Always pay your credit on time. If there is a 15-day grace period, that is not considered on time. Pay your bills by the due date, not by the penalty date
- Be careful with forbearance. Even if politicians say using it will not hurt your credit, be cautious, and only use that if you really cannot pay your mortgage
- Do not buy items on impulse simply because the store will finance it for you. If you cannot afford to buy it now, do you really need it? The item you buy today may block the big things you need in the future
- Do not switch jobs just before purchasing a home, or during the process
- Do not purchase a home while going through a divorce unless your attorney says it is ok
Loan Is Not Done Until Funded
By no means is this a complete list. For some reason lenders terminology has changed over the years. Loan approvals have so many conditions they are not really approvals until all the conditions have been removed.
We mention these 10 items because we have seen loans denied or deals fail from all 10 of these items. Agents assume all buyers know these things, and the truth is they do not. Some inexperienced agents do not know these things. How could they? You only learn through experience.
Remember, there is no substitute for experience. Always hire the most experienced Loan officer and the most experienced Realtor you can find. Experience can help you avoid costly mistakes on both the buying and selling end. If you think hiring a professional is expensive, wait until you hire inexperienced people. That gets expensive.
To search the MLS like a pro, check out www.LeeCountyOnline.com It’s better than the national sites and has all the listings in real-time. Or call the Ellis Team at Keller Williams Realty 239-489-4042. Our team will be glad to help.