Buyer's SPENDING SPREE! Bring em to a screeching halt! Before BLACK FRIDAY!

Services for Real Estate Pros with Retired Realtor / Retired Home Inspector

Buyer's SPENDING SPREE! Bring em to a screeching halt! Before BLACK FRIDAY! OR, that pre-approval you have on their HOME LOAN, may go up in smoke as Santa comes down the chimney with the gifts!

Screeching Halt

No Credit Card Christmas ShoppingThis Friday will be the beginning of Holiday Shopping for most families. This is also the time of year when CREDIT CARDS get maxed out. This can be VERY DETRIMENTAL to the home loan your buyers just applied for.

Sure they have PRE-approval, Their debt-to-income ratio has been determined, they have their down-payment set safely aside, they know how much they can afford for their monthly house payment. Everything is good to go... OR IS IT???

In this economy lenders are being more thorough than ever. Checking and double checking the status of their clients during the processing of their loan. Underwriters are rechecking credit reports right up until closing to make sure the buyer still qualifies for the loan. The lender has run a final credit check just prior to closing and discovered some new entries.....The credit cards your Buyers just maxed out on their HOLIDAY SHOPPING SPREE! Or...the NEW CAR they bought themselves for Christmas!

Now EVERYTHING CHANGES! Their debt-to-income ratio no longer qualifies them for the loan they need to buy the home. They either need to come up with a larger down payment OR...(I know this hurts) choose a different house at a LOWER PRICE!

For every $100 your buyer is spending on BILL payments (credit cards, car loans, etc.) They lose approximately $10,000 in home loan eligibility.  So if they just added on $200.00 per month in Credit Card debt they now qualify for $20,000 less on their home loan!

No New Christmas DebtMost buyers do not realize this or even think about it. As Real Estate Professionals it is very important to educate your buyers early in the home shopping process. Inform them to NOT MAKE ANY CHANGES such as Applying for Credit Cards, ADDING NEW DEBT, or even Co-Signing a loan for someone else, as this will change their debt-to-income ratio and thus the amount of the loan they can qualify for.

Other Important tips:

    • CANCEL/CLOSE any OPEN inactive Credit Card accounts. Even with a zero balance, a credit card with a $5,000 limit can be considered by the lender as potential future debt.
    • Make sure they keep their current bills up-to-date and have no delinquencies during the loan process.
    • Don't make any drastic changes in employment during the loan process. (Except: Take that RAISE!)
    • Don't apply for, or change personal lines of credit.
    • Do not apply for, accept or obtain any new credit cards, including credit card accounts at retail or discount stores, gas stations or grocery stores.
    • Don't increase your available balance on existing credit cards 

 Happy Thanksgiving

 I'm a NEWBIE on ActiveRain and would LOVE to have your comments. Thank You!!!

Posted by

Cheryl Dickson
970-462-5100 Wichita Falls, TX

Staff - Wichita Falls AssociationĀ  of Realtors


Retired Realtor-GRI / Retired Home Inspector

Comments (11)

Gary Coles (International Referrals)
Venture Realty International - Las Vegas, NV
Latin America Real Estate

Cheryl, I just saw your comment on Richie's post and had to come over. I blew out a tire on a motorcycle at about 70 mph too.  It was in North Africa in the middle of nowhere and was a wild ride. 

Then I noticed that you are a Newbie here in the Rain. So -- welcome and I hope you enjoy it here -- I have.  If I can ever help, email or call me. 

I think your posts are looking really great and are very informative and helpful.  You are off to a great start in the Rain.

Nov 21, 2011 05:53 AM
Cheryl Dickson
Retired Realtor / Retired Home Inspector - Oklahoma City, OK
Retired Realtor, GRI / Retired Home Inspector

Thanks so much Gary! Wow! That must have been a wild ride in North Africa. How exciting! Thanks so much for commenting!

Nov 21, 2011 08:19 AM
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Cheryl, lots of good ideas in your post, here.  No spending sprees allowed.  But... sometimes, when buyers are being TOO careful, they may cancel credit cards trying to look "budet conscious..." and end up with too few "lines" of credit, which the underwriters also do not like.  I believe most underwriters like to see something like four or five open "lines..." meaning credit card accounts.  When in doubt, check with your loan officer.  Different lenders can have different policies.

This is a fabulous post... so I have "suggested" it for a Featured Post.  Also... I see you have submitted this post to the Active Rain max of five groups.  Great Job !


Nov 22, 2011 11:19 AM
Lora "Leah" Stern 914-772-4528
Coldwell Banker, 170 N Main Street, New City NY 10956 - New City, NY
Real Estate Salesperson

Cheryl -Every buyer should be aware of tghat income to debt ratio and chuck the credit cards until after closing.  Great advice, Great post and suggested. 

Nov 22, 2011 03:28 PM
Joni Bailey
101 Main St. Realty - Huntsville, TX
Your Huntsville / Lake Livingston Area REALTORĀ®

This is great information for your readers. Welcome to the rain! Looking forward to more good stuff!! :)))

Nov 22, 2011 11:52 PM
Larry Atkins
State Wide Realty Co. - Farmville, VA
Veteran Owned & Operated

Cheryl - I can see why you were disappointed when this one didn't attract attention immediately. It's very well written, perfectly timed and has a VERY important message. SUGGESTED and REBLOGGED!!

Nov 23, 2011 01:29 AM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hi Cheryl --- I remember seeing a first time homebuyer(wannabe) drive up to our second appointment in a brand new car .... thankfully it was a loaner that day......YIKES!  Especially since our first appointment reviewed the no major purchase trap while trying to buy a home.  

Nov 23, 2011 08:40 AM
Keller Williams Select Realtors-Buy a home in Washington DC. Sell a home in Washington DC - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES

Larry Atkins brought me to your blog. This is something we Real Estate Agents need to remind our clients especially one who are going to be closing this month or next month. Well written blog. Wishing you and your family a Happy Thanksgiving. Great post.

Nov 23, 2011 02:52 PM
Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Good words.  People don't think.  They react.  Unfortunately they react emotionally.  The who world needs to know and understand that Friday's binge will be a disaster for some!  Just extraordinary words!  Thanks

Nov 23, 2011 03:13 PM
Cheryl Dickson
Retired Realtor / Retired Home Inspector - Oklahoma City, OK
Retired Realtor, GRI / Retired Home Inspector

I want to share a post from Larry, that goes hand in hand with this blog, and has MUCH more info about GETTING and KEEPING loan approval. Please check out this post: You've got a loan approval, now let's KEEP it.  I wish it would be featured because it has very good tips!

Nov 24, 2011 04:09 AM
Cheryl Dickson
Retired Realtor / Retired Home Inspector - Oklahoma City, OK
Retired Realtor, GRI / Retired Home Inspector

Karen -VERY good points! Communication AND cooperation with the lender is of utmost importance. Thank You so much!

Leah -So true and Thank You!

Joni -Thank You, You are in inspiration!

Larry A. -Thanks SOOO much for sharing, It got the word out just before "Black Friday"

Mike -Yikes is right! Whew, that was a close call!

Lanre - Thank You so much! Happy Thanksgiving!

Larry B -Yes unfortunately we all let emotions get control sometimes. I'm afraid there will be alot of IMPULSE Buying during the holidays that could drag some folks finances down in this tough economy. Thank You so much Larry.

Larry C. - Shucks! we don't have a Larry C. Maybe he will find us!


Nov 24, 2011 04:30 AM