You Are In A Contract To Purchase A House - Now What?

By
Real Estate Agent with Classic Realty Realtor

Some time back a Real Estate friend phoned me and expressed his frustration about a purchase transaction. He said, "David I just heard from the Loan Officer of one of my clients I'm working with". My Agent Friend continued on to state his "Clients (who were barely approved because of past Credit Issues) went out and spent a huge chunk of money on Credit while Under Contract"! As a result, their Credit Scores that were borderline, plummeted and are now below the acceptable level for a Mortgage". In other words, the deal his clients thought they had is dead! This was all because of a financial mistake, a very costly slip-up.

As I thought about my friend, his clients and the dead deal they now face, I decided to sit down and write out some financial "Do's and Don'ts" for my own clients who have a Contract and are waiting to close. In fact, I would urge anyone who is reading this today and contemplating a Real Estate Transaction, to pay attention and abide by these Simple Rules:

1. Do Pay your Credit Cards on time (Now is NOT the time for a late payment of any kind)
2. Do not buy any BIG Ticket Items on Credit or Cash - (Example: Car/Furniture/Even Furniture for your NEW House)
3. Don't change Banks or Accounts (Loan Officers must look back over the previous months/years to track spending)
4. Never, never, never make a Job Change when in the middle of a Contract
5. Always Protect your Down Payment Money (Your Loan Officer will be checking the availability of funds before close)
6. Never co-sign for anyone, but especially when waiting for your Home to Close
7. Do NOT move money from Account to Account (You could sabotage the deal)
8. Do NOT let anyone run a Credit Check for you for a purchase of any kind (This can change your Credit Score)

So you are in a contact to purchase a house - now what? Simply follow the above "Do's and Don'ts" and any financial guidlines your loan officer lays out for you.

Comments (12)

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

David:  I don't believe we can overstate the importance of this "Do's and Don'ts" list you provide.  Seems no matter how many times we provide the info or provide the list ... someone .. somewhere ... still slips up.  Hope the credit issue is soon resolved for these folks and they are out house-hunting again fairly soon ...

Gene

Jun 26, 2013 09:25 AM
Melanie Narducci
Hillscape Properties, Inc. - San Francisco, CA
Your San FranciscoBay Area Real Estate Expert
This list is so helpful for clients, David. No one wants to shoot themselves in the foot at a critical juncture.
Jun 26, 2013 10:26 AM
Kathy Stoltman
Balboa Real Estate - Ventura, CA
Ventura County Real Estate Consultant 805-746-1793

David, this should be a disclosure that the buyers must read before entering into a transaction, but with the mountains of paperwork we have, I am afraid the information would get lost.  Very important topic.

Jun 26, 2013 11:30 AM
Jeremy De La Garza
Corpus Christi Realty Group - Corpus Christi, TX
Corpus Christi, TX

Very good information to share with buyers!

 

 

Jun 26, 2013 11:46 AM
Michael Bonvino
REMAX Gold - Nevada City, CA
Michael Bonvino, Realtor®

David, what a wonderful article! I wish that I my some short sale clients had read this before their townhouse was listed. They decided to get fired (the wife) and quite their job (the husband) throughout the short sale negotiation process. What a head-ache that was! 

You've inspired me to create a document to give to all of my new short sale clients (and all clients for that matter!)

Thanks a million!

Jun 26, 2013 11:54 AM
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Flower Mound, TX
Selling Homes Changing Lives

Hi David - congratulations on the featured post! This is very important information that you outlined for potential buyers. A pre-approval doesn't guarantee a loan. There are guidelines and requirements for the buyer and a change downward with the Credit Score during the home buying process is not going to help. You nailed it with this post! 

Jun 26, 2013 12:08 PM
Rosie Moore
Serving Sugar Land, Richmond, Rosenberg, Missouri City - Sugar Land, TX
Awesome post!! This is one of the topics I include in my buyers packet at my consultation appointment.
Jun 26, 2013 12:18 PM
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

David -- I always give this type of advice when I have an initial TALK with buyers.  I tell them a couple of horror stories and examples of what can happen OR NOT if they violate one of these rules.

Jun 26, 2013 01:30 PM
David Shamansky
US Mortgages - David Shamansky - Highlands Ranch, CO
Creative, Aggressive & 560 FICO - OK, Colorado Mtg

Oh the credit cards, furniture purchases and AUTOS!?!?!?! Yep by far I see the auto almost always as the culprit when this occurs as the idea of spending money all at once and moving on seems to hit a chord with many BUT when it coincides with a home purchase or refi that can quickly kill the deal

Jun 26, 2013 03:14 PM
Carol Zingone
Berkshire Hathaway Home Services Florida Network Realty - Jacksonville Beach, FL
Global Realtor in Jax Beach, FL - ABR, CRS, CIPS
Great post; many buyers forget one or more of these, and don't really appreciate how much it can monkeywrench the process.
Jun 26, 2013 07:55 PM
David Burrows
Classic Realty - Fairfax, VA
No Pressure, Just Seriously Devoted to Real Estate

Gene, you are correct when indicating we can't over state the list of "do's and don'ts"....  Thanks for coming by and sharing your thoughts.

Melanie, I appreciate you reminding us that no one wants to shoot themselves in the foot when in a contract to buy a house.

Kathy, it is an important topic and I suggest putting it into a buyers packet, given to them at the beginning with plenty of reminders along the way.

Jeremy, it is an important topic that must continually be addressed.

Michael, great idea to prepare a document. Thanks for coming by today.

Patricia, I am always delighted when you stop by and share your thoughts. This truly is important information that all Real Estate Agents and Loan Officers MUST share with clients.

Rosie, I'm glad to hear you are looking ahead on this one. You are wise to do so.

Joan, this is an important talk that ALL agents must have with their buyers.

David, the rule is simple, "No purchases made while waiting to close when under contract to buy a house". Thanks for sharing.

Carol, do violate this rule can truly "monkeywrench" the process. Thanks for coming by today.

 

 

Jun 26, 2013 08:53 PM
Yolanda Cordova-Gilbert
Richmond, TX
David Great posts and congratulations on the feature! I hope you have a wonderful weekend! Cheers!
Jun 29, 2013 04:13 AM