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Dear Buyer ... Please Quit Spending!

By Gabrielle Nemes

Real Estate Agent with RE/MAX Realty South WA State: 75600

August 04, 2009 05:06 PM

Sigh, it's happened yet again. Somehow no matter how much counseling, another Buyer's forgotten one of the golden rules of buying a house: If you spend money on credit cards, buy a new major appliance on credit, buy a new car, decided to furnish your new home before closing ... you run the risk of not qualifying for your loan. Even if you qualified before you ever started shopping.

There's nothing more disheartening to find the home of your dreams, go through all the steps ... qualify and be preapproved for your loan, inspection, title searches, negotiations, etc., ... and then find out just before closing that, yes, the underwriter reviewed that last credit report only to find an additional new monthly payments

OH NO! There's a new credit line that blows the debt to income ratios totally apart.

Yes, sometimes life gets in the way of judicious decisious during the period of time between making application for a home loan and closing. And some Buyers have sufficient income and are shopping far enough below their top qualifying number to sustain an extra monthly payment, but typically not.

Not only are your credit scores, credit history, and monthly debts examined at the time application is made, they're checked again right before closing to be sure no significant changes have occurred. Qualifying for a mortgage is difficult right now. Hang on just a few more weeks. Wait until after closing.

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Karen Anne Stone

New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX

Fort Worth Real Estate

Gabrielle: It is imperative that the buyer's Realtor implore them to NOT make any purchases, open any new charge accounts, or do ANYTHING that will either increase their debts, or increase their available credit lines. Doing things like these mentioned... can easily be seen as "upping the risk" as far as the lender is concerned... and can honestly blow the whole transaction out of the water.

Sometimes buyers will listen to you... but then, once they get "approved" they think it is ok to go out and buy stuff. But... time and time again, lenders will re-run the credit the day before closing, and will pull the approval if the buyer's credit picture has changed.

Aug 04, 2009 05:55 PM

Gabrielle Nemes

RE/MAX Realty South - Tumwater, WA

206.300.8421, S King & Pierce County RE Advocate

Rick: Doesn't it just break your heart when it just falls apart like this!? And there just aren't a lot of options for the Buyer when it does. Loans are hard to come by and then to blow it. I get that last minute call every now and then from the Buyer at the appliance store asking me if it's okay to buy the refrigerator ... on credit ... before the house closes! NO!

Aug 04, 2009 05:56 PM

Terry Chenier

Homelife Glenayre Realty - Mission, BC

Gabrielle,

I tell buyers, don't buy anything bigger than a chocolate bar until you move in.

Aug 04, 2009 06:00 PM

Karen Anne: You know, you tell 'em and you tell 'em. And then they forget thinking everything is going along just fine and they're "safe."

Terry: Great phrase! I may have to steal ummm, borrow this one! Thanks!

Aug 05, 2009 04:31 AM

GLENN LEACH

Mortgage - Puyallup, WA

I just had a file that got delayed because the borrower bought a house full of furniture on credit. I found a work-around, but it involved a total re-underwrite. Then the borrower's agent started pounding on ME to pay for the furniture storage fees because we didn't close on time and the furniture couldn't be delivered.

Uh, I didn't pay any storage fees and I'm not expecting any repeat business from that agent either - life is too short for that. Thanks for a great reminder to all. It's time for all of us in the industry to start using our Top 10 "Don'ts" lists again - many problems that could have been worked-around in the past just can't be now. An ounce of prevention...

Aug 05, 2009 02:36 PM

Glenn: I sincerely feel your pain! But good grief! It does sound as though the buyer's agent was a little out of line on this one! Unfortunately, we all be using our Top 10 "Don'ts" lists, but we're not always listened to. Or the buyers just forget. Or they get sucked in to a "once in a lifetime sale!" at the furniture store.

Aug 06, 2009 03:25 AM

Dear Buyer ... Please Quit Spending!

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