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Top 5 Things to Avoid Before Your Loan Closes
March 18,2016 - 10:24 AM

You've found your dream home, you're packed and ready to go, the only step left is the closing of the loan. At first thought this may seem insignificant. You've already turned in every financial document anyone this side of the moon could conceive of, you've signed your first born away and put down a sizable earnest money deposit. Closing can easily seem like bureaucratic nonsense, but there is more to it than that. Prior to closing lenders give everything one final review.

They do one last check to make sure everything is still in order and ready for closing. In this they verify key pieces of the loan such as employment and credit. Don't risk your house and your loan. Below are the top 5 pitfalls to avoid before closing your loan.

1. Open new lines of credit. Don't do it, don't even think about it or you risk losing your loan. Your credit is monitored until the very moment your loan closes. Opening a new line of credit can ding your credit score. A drop in credit score could preclude you from qualifying for the loan. You can't close it once it's open; so the damage will be done. Unless you have other previously accounted for lines of credit with balances above 30% that can be paid down there will be very little you can do to counteract this. If you absolutely need the credit wait until after closing. Borrow the money from your parents, brother, sister, neighbor, but don't risk losing your house over a new line of credit.

2. Drive up balances on existing credit. This goes hand in hand with number one. Increases in credit above 30% drop your credit score, which puts you in the same position as number one. However, utilizing credit goes against your debt to income ratio. So now you're taking a double hit, one against your credit and the other against your debt to income ratio. It's not worth it. It may seem tempting to buy new curtains, rugs and furniture for your humble abode, but just wait.

Lender's can revoke a loan up until the moment it closes and you have the keys in your hand. So until your loan closes make a few new Pinterest boards and be patient. Jumping the gun isn't worth losing your home.

3. Lease a car. I know you may be looking at me confused right now; it's a lease and doesn't involve credit, what could possibly be wrong?

But it does. Leases involve a hard credit check, which will tip off your lender to a potential new debt. And that is exactly how leases are treated. The monthly payment will be treated like any other debt payment and count against your debt to income ratio. It's easy to get caught up in the excitement of a new home and want to add a new car to the mix, but as it's been said be patient. Wait until you have the keys in your hand to add a vehicle lease to your financial mix.

4. Switch Jobs. This one too can be confusing. What does it matter if you're making the same or more than at your previous position? The trouble arises in verifying income. The bank will have to verify that you are not at your previous employer, what your wages are in your new position and if there was any lapse. Depending on the time frame it may be difficult to supply adequate documentation of this right off the bat. While this doesn't necessarily guarantee that you lose your loan it can delay closing and put your deposit at risk. If you're offered a new job simply ask to delay your start date until after closing. Most employers will understand this and allow you to delay your move. As with the theme of this blog, patience is key.

5. Cosign a loan. Most people would advise against this in the best of circumstances, but it is especially dire during the home buying process. Cosigning a loan is making you financially liable for someone else's debt. Not only will your credit take a hit when the lender for your cosigner pulls it, but the monthly payment will be added to your affordability profile. It doesn't matter that you don't currently or even except to ever have to pay this. You are liable, which means if the primary borrower can't make the payments you will have to.

Depending on the size of the loan this could put you over the acceptable debt to income ratio. Buying a home actually provides a fantastic out for this enormous favor. Simply let your friend or family member know that you've found your dream home and the lender won't close the loan if you've cosigned. It's the truth and keeps you from being liable for someone else's debt.

Buying a home is one of the most exciting transaction you will ever enter into. It's also an incredibly complex one. Until your loan closes ask questions about how your actions may affect the loan. They would much rather have you ask first and avoid disaster than try after the fact to save a floundering loan. Be patient. While it might seem like eons before your loan closes this usually happens relatively quickly. Patience is a virtue demanded while buying a home. Don't let a silly misstep cost you your dream home.


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Spring Into A New House
March 17,2016 - 9:14 AM

We're a mear three days away from the official start of spring and boy I can't wait! I love our rainy winters, but my artificially buoyed vitamin D level is eager for the real thing. As we get warmer so does the housing market. All indications are that this is going to be a great year. If you've been considering buying or selling there couldn't be a better time. Getting started and making a plan now could mean you capitalize on a truly historic market. Here are a few reasons to jump into action.

Inventory is low. This what we in the industry call a seller's market.

There are a lot of people looking and not a lot out there. This is great if you're looking to sell. Even homes only purchased a few years ago are showing incredible returns. If you've been thinking about upgrading or just need a change now is the time! And don't worry about buying - the trick is to be ready to sell and list to moment you find your next dream home. This truly is the time to maximize your benefits. Besides the comfort and ease or selling your home quickly is worth it on its own.

Interests rates are low. I know we've been discussing the historically low interest rates for a few years now. Don't get lulled into a false sense of security; this isn't going to last forever. Consider this, rates have been low for a few years increasing the likely hood that we will see a hike sooner rather than later. On top of this it's an election year, so while we're unlikely to see a large hike in the immediate future there is a lot of uncertainty once a new president is elected. Don't let complacency cause you to lose out on this fantastic climate. Not only do low interest rates save you tens of thousands of dollars over the course of your loan, but it enables you to make a bigger investment up front. Less interest means less of your monthly payment is going to pay the bank leaving more that can go towards principal. This means that instead of buying the cute ranch on a smaller lot you can afford the two story colonial on an acre. Wasting time in this case is literally wasting money.

Be settled by summer. Let's be honest the physical act of moving is a pain. There's the month spent packing, cleaning and preparing followed by a week or two physically transporting your stuff only to be bookended by another month of unpacking and settling in. If you wait until June you are liable to spend your entire summer moving and settling in. By starting this process now you can be done in time to enjoy the few months of sun we are lucky enough to get. You want a new house, but don't want to spend all summer preparing to and moving.

Starting now gives you the lead time to plan, prepare and be settled in time to still enjoy outdoor bbq's and a leisurely vacation.

Early bird gets the worm. I'm sure you've heard this a thousand times, but it even more so applies to real estate. Especially in a seller's market being prepared and jumping the moment the home you want is invaluable. You know your house is going to sell, but so is the one you want if you aren't prepared. Meeting with an agent and coming up with a plan could be the difference in getting the house you want or settling for second best. Meet with an agent, make a plan and make it happen. Don't let a hot market and low interest rates go to waste.

Jump in and take advantage before the market becomes more saturated the closer to summer we get.

It's a great market no doubt about it. The right agent will be able you to make a clear plan enabling you to maximize your benefits - get the most for your house and jump on the upgrade the moment it's available. The only certainty is that things won't stay the same and since the market and interest rates can't get much better this is surely not to last. Stop putting off today, what will be less than tomorrow. Meet with an agent and let them show you how to take advantage before everyone on the block feels the same.

Bountiful hunting!

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Why Use an Agent
March 07,2016 - 11:04 AM

As you confidently click through photos of homes online it's easy to ask yourself how much a real estate agent is worth. How hard can the paperwork actually be? Surely it's not something you couldn't handle -right? Before you start calling to view properties or plop a for sale sign down in your yard here are a few things real estate agents have to offer. They are licensed professionals. This means they have been through extensive education and training. They know how find you the right house and how to assure you keep it after. Having a license comes with some pretty serious perks. As an unlicensed buyer you're going to be at the mercy of sellers or listing agents to show you their homes. This puts serious time constraints on the viewing process. If you're too slow to be able to jump you're liable to lose more than a few houses. As a seller you're not only going to have to keep your home immaculate, but you're going to have to be ready to show it at a moments notice. If you have a full time job or enjoy having a life on the weekend this will become pretty exhausting, pretty quickly. Even if you are independently wealthy you don't have the assurance of knowing who is entering your house. It's better for your safety and sanity to go with an agent. They know the contract and how to negotiate it. While it seems like no big deal a lot more goes into the few sheets of paper you sign at the real estate agents office. There are innumerable addendum's that will protect you from financial hardship or certain failure. If you put an offer on a house and don't include an inspection contingency you run the risk of being legally obligated to buy a house with a hidden, problem. If you don't want to pay closing costs you're going to have to negotiate. Especially if you're working against another agent you're not going to have the know how to keep your costs low and your protections high. Agents can not only save you closing costs, but can help you negotiate a lower price by leveraging items that may need to be repaired or fixed down the road. Haggling at a car lot is a lot different than over real estate. The risk often isn't worth the reward.They serve your best interest. While all agents must adhere to a strict code of ethics they will always have their clients best interest at heart. Agents can help you wade through this often emotional process and make sure you aren't pressured into a contract that isn't 100% right. It's more than likely that you will be buying or selling against another agent and while they have to disclose all known issues they won't be looking out for your pocket book. If the neighborhood is bad news, apartments are going in next door or the little 3% at the bottom of the page means you're stuck paying 3% of the purchase price in closing cost you're going to want an agent. Having an agent takes much of the liability off of you. They are here to tell you when a deal isn't quite right and can save you thousands in extra costs. They have connections. While this may seem trivial it can make a big difference in the home buying or selling process. Agents are going to know which appraiser, inspector and mortgage broker to use. This can not only save you time and money, but can be the key in navigating the process seamlessly. An appraiser that is familiar with the area and type of property you are buying can make a huge difference. If the house you love doesn't appraise for what you offered you have to come up with the difference in cash or have to find a new home to buy. The same goes for inspectors. Making sure the inspector is worth his two cents could mean the difference between spotting a problem now or finding out half your heaters don't work during the cold snap 2 weeks after you move in. Knowing where to go plays a huge difference in the process.This is what agents do everyday. They know where to go, how to get there and how to spot pitfalls before you're driving over the cliff. What agents cost you in commission they save you in costly mistakes that can quickly outweigh a brokers fee. So unless you're content risking financial hardship and want a few dozen more grey hairs it's better to discuss with an agent how they can assist you. Your head, heart and wallet won't be sorry!

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