Buying a Home ~ Please Do Not Do These Things While You Are In Escrow.

Reblogger David Popoff
Real Estate Broker/Owner with DMK Real Estate Ct RE Broker 0789963

Many criteria make up the purchase process for a home, keeping an even keel and maintaining your current credit is one key factor that you can control. Please read these great tips from Kevin Kueneke on the do's and don'ts when in escrow.

 

For more information on credit scores and how to improve them check out this post Ct What's In a Credit Score & Tips To Improve.

 

Please leave comments on orginal post.

Original content by Kevin Kueneke NMLS#284800

As part of Fannie Mae's Loan Quality Initiative (LQI), lenders are required to monitor a borrower's credit throughout the loan process.  This can include a "soft" credit pull immediately prior to funding to look for new accounts and inquiries.

Here are ten things that a homebuyer should avoid while in escrow:

•1.      Don't do anything that will cause a red flag to be raised by the scoring system.  This would include adding new accounts, co-signing on a loan, changing your name or address with the credit reporting agencies.  The less activity on your reports during the loan process, the better. 

•2.     Don't apply for new credit of any kind.  Including those "you have been pre-approved" credit card invitations that you receive in the mail or online.  A new inquiry can potentially lower your credit score. Happy New Homeowners!

•3.     Don't pay off collections or charge offs.  Unless you can negotiate a delete letter, paying collections will decrease the credit score immediately due to the date of last activity becoming recent.  However, in some cases, collections or charge offs must be satisfied as a condition of loan approval, but your lender will most likely only need to update that particular account with a credit supplement vs. a new credit report. 

•4.     Don't max out or over charge on your credit card accounts.  This is the fastest way to bring your scores down.  Try to keep your credit card balances below 30% of their available limit at ALL times during the loan process.  If you decide to pay down balances, do it across the board.  Meaning, pay balances to bring your balance to limit ratio to the same level on each card (i.e. all to 30% of the limit, or all to 40%, etc.).

•5.     Don't consolidate your debt onto 1 or 2 credit cards.  It seems like it would be the smart thing to do, however, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you as mentioned above in 4.  If you want to save money on credit card interest rates, wait until after closing.

•6.     Don't close credit card accounts.  If you close a credit card account you will lose available credit, and it will appear to the FICO that your debt load has increased.  Also, closing a card will affect other factors in the score, such as length of credit history.  If you HAVE to close a credit card account, do it after closing.

•7.     Don't pay late.  Stay current on existing accounts.  Under the new FICO scoring model, one 30-day late can cost you anywhere from 50-100 points, and points lost for late pays take several months if not years to recover.

•8.     Don't allow accounts to run past-due - Even one day! Most cards offer a grace period, however, what they don't tell you is that once the due date passes, that account will show a past due amount on your credit report.  Past due balances can also drop scores by 50+ points.

•9.     Don't dispute anything on your credit report. When you send a letter of dispute to the credit reporting agencies, a note is put onto your credit report, and when your lender notices items in dispute they will not process the loan until the note is removed and new credit scores are pulled.  Why?  Because credit scoring software will not consider items in dispute in the credit score -giving false date to the lender.  Disputed accounts are a no-no.

•10.  Don't lose contact with your mortgage and real estate professionals!  Don't do anything without the ok of both professionals in the transaction, until you have your keys.

These might seem obvious, but better safe than sorry.


 Kevin Kueneke, NMLS # 284800
San Diego County Mortgage Specialist
FHA Mortgage Loan Specialist/VA Mortgage Loan Specialist
Direct Lender, Mortgage Banker
Phone 760-500-1919 | Fax 619-419-2324

Visit My Website

Click HERE to Apply Now

 

 

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Rainmaker
1,113,070
Michelle Cooks
Charles Stallions Real Estate Services - Pace, FL
Pensacola, Pace & Gulf Breeze Property Management

All good things to watch for and be careful not to do, had one last week by lots of new furniture to go with the new house that they thought they were getting

May 04, 2013 02:32 PM #1
Rainer
1,756,848
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi David.  It is amazing how buyers can make those mistakes.

May 04, 2013 08:28 PM #2
Rainmaker
2,069,685
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

There is one more common error that folks make that I would add to the list, don't change jobs. I see this happen from time to time, even though it is on the list we give our clients.

May 04, 2013 09:24 PM #3
Rainmaker
756,187
David Popoff
DMK Real Estate - Darien, CT
Realtor®,SRS, Green ~ Fairfield County, Ct

All good reasons to work with experienced real estate professionals and other local businesses.

May 04, 2013 11:02 PM #4
Rainmaker
2,372,073
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale - Probate Broker

David, Great re-blog.  So many people innocently do one or more of the don't dos thinking all the while they are doing the right thing.  I advise all my clients of what not to do and explain why and the consequences if they do.

May 05, 2013 04:08 AM #5
Rainmaker
475,724
Lisa Friedman
Great American Dream Realty - Essex, VT
28 Years of Real Estate Experience!

On a listing I had that was set to close at the beginning of a long line of domino effect closings, the buyer decided to buy a $30,000 new car with a hefty monthly payment.  The mortgage company ran their credit report a few days before closing.  The couple had to wind up getting an emergency "gift" from their parents to pay off the car.  I don't know how the bank ever approved that gift letter, but it closed (with a lot of people holding their breath!).

Another great list!

Jun 12, 2013 03:04 AM #6
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Rainmaker
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David Popoff

Realtor®,SRS, Green ~ Fairfield County, Ct
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