The excitement of home buying has been known to make buyers lose their judgment. Here are 10 ways you can keep your clients informed to prevent them from blowing up their home chances.
This month we will speak to leading mortgage lenders about where the market is headed and how products are digitally evolving to meet buyer needs. We’ll also be exploring new alternative funding options that are changing the game for buyers and sellers. Visit us for the month of the mortgage and alternative financing.
A few years ago, in a similar market to what we are currently experiencing, we managed to get buyers to contract for the home of their dreams. It was very tiring; They were blown out in many several offer situations before we finally managed to get a deal on. Needless to say, they loved it.
A week later, when they drove to the property to meet with the inspectors, I noticed that they were driving a brand new BMW. “You borrowed the car, didn’t you?” I asked.
The husband proudly proclaimed, “No – it’s ours – now that we know we’ll have a garage, we’ve bought a car to drive in.”
Speechless for a moment, I gathered my thoughts and then said, “I’m sorry to say that, but you no longer have a garage. In fact, you no longer have a house. “
Unfortunately, their new car purchase pushed their debt ratio over the limit and they no longer qualified for the mortgage required to purchase the home. That was a day of bitterness for buyers and reckoning for me.
It was a new phase in my career: a commitment to make sure I’ve changed the news we are making available to buyers In front They look for houses so that mistakes like this never happen again.
We are now planning to meet with all of our buyers before opening the door to a potential home. Although we cover many topics in our time together, we pay special attention to credits and bans as well as possible financial errors to avoid them once they are included in the contract.
Here are the top 10 things we recommend for you right now never to do Once they start buying a home:
1. Do not apply for new credit
Most people understand this, but some are so excited about new opportunities that they start setting up lines of credit with furniture stores, home improvement centers, and the like.
Every time a buyer applies for a new loan, their loan is drawn on by a prospective creditor or lender and they run the risk of instantly losing credit points.
2. Don’t make big purchases
We encourage our customers to press their “patience” button and avoid making large purchases until the Escrow is closed. Although we explain this to all of our buyers in advance, we are constantly being asked questions like “The devices I want straight went on sale – I can save hundreds. Are you for sure I can’t buy now? ”
We declare that you should continue when you have enough reserves to be able to pay cash. If they have to buy with credit, they have to hold back.
3. Do not withdraw collections or ‘withdrawals’
This point might seem counterintuitive, but let your customers know that if they want to pay off old accounts, they will do so through an escrow account. After the debt has been settled, make sure that you receive a “letter of cancellation” from the creditor.
4th Do not close credit card accounts
When you close credit accounts, your debt ratio appears to have increased. Closing credit cards affects other factors in score, including credit history. Lenders use active lines of credit to determine creditworthiness, so they need to stay active.
At one point, our clients preemptively assumed that it would be best to take as little credit risk as possible, so they closed all lines of credit before applying for a loan, only to find that this was the worst thing they could have done.
5. Do not overcharge or overcharge your credit card accounts
Tell them to keep their credit card balance below 30 percent of their limit during the loan process. When a buyer cashes out funds, do so across the board. Whenever possible, keep credit card spending to a minimum during the purchase process.
6th Don’t consolidate your debt
When consolidating debt on one or two cards, the buyer appears to be “maximal” on that card and is therefore penalized.
7th Do not change the bank accounts
Do not close accounts, open new accounts or switch banks. This sends all kinds of warning signals to credit insurers.
8th. Do not deposit cash into your bank accounts
Instruct your buyer to speak to their lender In front Make cash deposits. If the money is from a family member, it must be accompanied by a gift letter.
If it is cash from any other source, the lender must verify its source In front it hits your account. Likewise, buyers should not arbitrarily transfer money from one account to another.
9. Do not sign any loans with anyone
This is never a good idea at first, but while your buyers are getting their own loan, it is forbidden.
10. Don’t do anything strange
Instruct your buyers to avoid things that cause rating systems to hoist a red flag, such as: B. changing their name or address, missing payments, late payments, or changing spending patterns.
It’s hard enough to get a deal these days – make sure your buyer doesn’t financially self-destruct along the way.
Carl Medford is the CEO of The Medford team.