Frisco Texas Mortgage, Real Estate, Events, and more

Should your life stop just because you're buying a home? In short... YES!

Should your life stop just because you're buying a home?  Truthfully, you never know what affect actions you take today will have on the mortgage you apply for. Even if you don't plan on refinancing or purchasing for another three to six months from now.

Something as simple as transferring money from your savings to your checking account can create hassles in the mortgage process. I know it may seem a bit much, but lenders are paying closer attention to mortgage transactions today. Sure, the transfer of money seems simple enough.. and maybe it is. But when lenders see a large sum of money transferred into an account, they want a paper trail to know where the money came from and be sure that all accounts balance.

There are at least six things that should be avoided when purchasing a home or refinancing your existing mortgage. Even if you are already 'pre-approved', you should wait until the loan has closed.

Buying, Leasing, or Refinancing a Car - Many people are inclined to 'improve their social standing' by purchasing a car and buying a home at the same time (yes, this includes leasing a vehicle). There's nothing wrong with the concept itself, but buying the car before buying a home can affect what the lender determines you can afford for a home. Since a car is such a big ticket item, it can greatly raise your debt-to-income ratio, which lenders use to determine the amount of home you can afford. Ultimately, it will affect how much home you can purchase. Refinancing your automobile can affect your credit scores. Even though you are probably lowering your payments, the refinanced loan is considered new debt when calculating your credit score.

 


Becoming Self-Employed or changing jobs -
Either of these could have a negative impact on your loan application and overall approval. In most cases, lenders want to see at least 2 years of self-employment. Keep in mind that this means 2 years worth of tax returns, which really means you probably have to be self-employed for more than 2 years in order to provide a full 2 years worth of returns. ** also, income is determined based on the 'Adjusted Gross Income' (after your deductions) ** Wait until after buying a home to become self-employed.

Changing jobs to a 'sales' environment is also risky while you are considering a home purchase. Even though the position you accept is not considered 'self-employment' is it still sales based. If you were receiving a salary prior to your new 'sales' job then you will need to show 2 years worth of sales income. Being in a sales position has similar considerations as being self-employed.

 

Moving Money Between Accounts - I mentioned this in an example above. When a lenders underwrites your loan to determine your eligibility, they will request complete statements (yes, even the blank pages) from your accounts that contain liquid assets. When you move money around between these accounts, especially if they are large amounts, you will have withdrawals in some and deposits in others. The lender will want to see documentation for these transactions. Most people do not keep all of this paperwork, so it's much easier to leave the money in the accounts until after you have purchased or refinanced your home.

Change Banks - This pretty much ranks up there with 'moving money'. It just creates additional paperwork for you and the lender. The more paperwork, the more likely issues could arise for your home purchase. Not only could there be questions/concerns from the lender, but it could cause unnecessary delays in closing your loan. Stay with your current bank until the mortgage process is complete.

 


Make a Large Purchase -
A large purchase is not just about a car or boat. Now that you are moving into a bigger place, you will probably want to fill it with furniture... and that 'One Year Same As Cash' deal sounds really tempting. Resist the urge to purchase that new sofa set until after you have obtained the mortgage. Again, this is for two reasons. First, it could affect your credit scores and debt-to-income ratios. Secondly, remember that you are not done buying a home until the loan closes. There are no guarantees until that happens. Unfortunately, there are a number of things that could happen which results in a declined loan application. Contact your local mortgage professional to help you avoid any costly mistakes.

 

 

Apply For a Credit Card - Although this is the last item I mentioned, this is equally as important. The new credit card won't hurt your credit score too badly if you already have good credit, but it will cause the to question your financial stability for buying a home. For the time being, don't apply for no interest credit cards or department stores. After you are settled into your new home, there will be plenty of time for shopping.

 

In summary, when you are buying a home or refinancing your current mortgage, it is best to stay away from anything that will look as though you don't have your finances under control. The items above are just a few examples that could cause such a determination.

 

 

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Are you looking to purchase a Texas home?  Perhaps you love your Texas home but would be interested in refinancing your Texas mortgage to a lower interest rate?  

I'll help you get pre-approved for your Texas home loan and even suggest some very knowledgeable and professional Real Estate Agents in your area of choice.  If you are available to talk, I am available to listen.  Give me a call or visit my website for more details.

Do you want to know all of your mortgage options? Call me today and let's discuss them further.

Texas Home Loan Consultant

Always available for your Texas Mortgage and Home Loan needs!

John R Cannata    P#214.728.0449

NMLS # 322646

Texas Home Loan Expert

Frisco TX Mortgage

      

 

The views expressed on this site are mine alone and do not reflect the views of my employer.

Comment balloon 35 commentsJohn Cannata • October 26 2009 11:39AM

Comments

John, This is great advice for home buyers...now if only you could be sure they will adhere to these tips!

Posted by Wanda Kubat-Nerdin - Wanda Can!, So Utah Residential, Referral & Relocation REALTOR (Red Rock Real Estate) almost 11 years ago

I'm in total support. Yes, essentially, when they put their lives on hold, they are essentially telling me that this is priority to them. I want to work with these clients. Please share them with me.

Posted by Loreena and Michael Yeo, Real Estate Agents (3:16 team REALTY ~ Locally-owned Prosper TX Real Estate Co.) almost 11 years ago

If it's okay with you, I want to steal your thunder and write a similar post and relate that more in line with my side of the business. Sounds cool?

Posted by Loreena and Michael Yeo, Real Estate Agents (3:16 team REALTY ~ Locally-owned Prosper TX Real Estate Co.) almost 11 years ago

John - Nicely done here!  This stuff seems like common sense, but I know that someone once said that common sense isn't very common.  :)

Posted by Jason Crouch, Broker - Austin Texas Real Estate (512-796-7653) (Austin Texas Homes, LLC) almost 11 years ago

I have actually had clients leave their closing and head straight to 'rooms to go'

 

 

Posted by Tom Burris, Texas/Louisiana Mortgage Pro - 13 YRS Experience (NMLS# 335055) almost 11 years ago

Great information for people thinking about buying!  I usually have the "don't buy furniture" conversation with buyers when we place a contract on a home. 

Posted by Pam Simpson, GRI, Broker-Assoc. (Bob Leigh & Assoc., LLC) almost 11 years ago

Excellent, excellent.  Every home buyers should read this and every agent who doesn't already do so should provide this informtion to their buyers. 

I can tell you though that, no matter what you tell a buyer, if there is a sale, it's hard to keep them out of the mall.

Or, if they were in the market for a new vehicle before they signed the contract of sale, it's hard to keep them out of the auto showrooms while waiting for settlement.

 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) almost 11 years ago

John - very well put and great advice!  We have been fortunate so far not to run into this problem between application and closing but there will be a first time I'm sure!  We do have the similar conversation with our buyer clients but many people are stubborn and think they know best.  I'm throwing my hat in the ring with Loreenas in asing for these clients from you also - share them with me too!!!

ps I'm going to reblog later!

Brian.

Posted by Brian & Marie Spray, Frisco TX Realtors (www.DFWAreaRealtors.com - Action Realty Group) almost 11 years ago

If you don't mind...I am going to print this and give it to all my potential buyers!! What great information!!  I actually just had a closing postponed because my client didn't believe the lender when she told him not to move money (he constantly transfers money between his accounts).  Uggggg!

Posted by Jeanna Martinez (RE/MAX Access) almost 11 years ago

you know even after I have told clients not to do this or that ....guess what????

 

They do

 

but at least I can say I told you vs. them telling me why didn't you

Posted by Gene perez (Greater Mortgage Solutions & Valley Hills Realty ) almost 11 years ago

Great post - thanks for sharing...one more thing I have been told recently is not to close or pay off any accounts before checking with your LO. Who would have ever thought closing an account or Paying a bill off would get you in trouble?!

Posted by Cara Pearlman, Realtor - ABR, SFR (Frankly Real Estate, Inc) almost 11 years ago

Wanda - All was can do is share the information with the buyers/homeowners and repeat it a few times... hopefully they hear the message.

Loreena - If/When I have these buyers without an agent in Frisco, you are certainly the first person I will think of. If this post strikes an idea for you, please feel free to write the post. I find that many posts spark idea for me to write a post. Glad I can help.

Thank you Jason. So true about common sense. I think people hear the word 'pre-approved' or 'approved' and think they are free to do whatever they want. Obviously they are, but they run a risk. Better to consider this a priority and do nothing.

Tom - At least they waited for the closing. Heck, I'll drive them to the Roomstore if they are patient.

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 http://TexasLoanGuy.com) almost 11 years ago

Pam - Its important to have the conversation and repeat it a few times in conversation. Not to beat a dead horse, but nothing wrong with friendly reminders.

Lenn - I have been there. Recently I had a customer who really needed to buy a truck for work. He had to wait... and wait.. and wait some more. Luckily, he waited until the day after he closed to go out and finish his shopping. He had it all picked out and ready to go. It was a matter of signing docs and sealing the deal on the truck.

Brian - I have you in my books as well. No worries there. I owe the next one to Loreena, but you are next on the list for sure. Thank you in advance for the reblog.

Jeanna - Feel free to share it with as many people as you would like. Its on the internet to be shared with many, not the few. Thanks for reading.

Gene - So true. You dont want them coming to you afterwards asking why you did not warn them. Better to say 'remember when we talked about this exact situation'. Either way the conversation sucks if/when it happens. Hopefully they take your professional advice and no do anything out of the norm.

Cara -  Yes and No. If they are paying off a bill, that won't hurt too much. For example, if they have an active collection or a loan. Typically, you just don't want to payoff and close an account. Paying a credit card down to zero is great. Paying it off and then closing the account... thats a "no no". Anything that will effect your credit in a negative way is not wise. When you close a loan, if should be a good thing but in many cases it has a negative effect first.

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 http://TexasLoanGuy.com) almost 11 years ago

John - This is a great article.  You should consider adding another item, "Disputing anything on your credit report".  Fannie Mae now requires documentation the account is either; not the borrowers, or the item(s) must not show in dispute for AUS findings.  We just did two re-scores for one of our clients to get this condition cleared for loan approval.  The re-scores were even for the same account.  Transunion called the creditor, the creditor didn't answer andthe request was not processed.  Transunion still charged us for the rescore. 

Posted by David Krushinsky, AZ MB-0949619 MLO NMLS #202115 (Dk Home Loans, LLC) almost 11 years ago

Hi John,

Thanks for the excellent advice.  Our sons will eventually be wanting to buy their own homes.  I'll have them review this.

Posted by Bruce Brockmeier, Coached By Crouch (Internet Marketing Consultant to REALTORS®) almost 11 years ago

Dear John,

This is GREAT advice for all buyers. I had one deal blow up because the buyer went and bought a new car the week before closing. I told him not to spend any money, but I guess I should have kept reminding him. Thanks again!!

:)

 

Posted by Betina Foreman, Realtor, C.N.E., with WJK REALTY (WJK Realty) almost 11 years ago

Very well put. I am not sure why the general public is seemingly so oblivious to how they can potentially derail a real estate transaction with 'credit-affecting actions'. With all the commercials about free credit reports, you'd think they'd get it.

I'm glad you wrote this post. Maybe it will help!

Posted by Christianne O'Malley, Exceptional Service - Delivering Results in Reno! (RE/MAX Realty Affiliates) almost 11 years ago

Thanks for the post.  I am going to bookmark it and send it to my clients.  Hopefully, you aren't licensed in Arizona.

Posted by SEO Expert: Michael George, Real Estate and Law Firm SEO almost 11 years ago

Congratulations on the feature John! Well-deserved!

Posted by Wanda Kubat-Nerdin - Wanda Can!, So Utah Residential, Referral & Relocation REALTOR (Red Rock Real Estate) almost 11 years ago

Good info. Now we just need to make sure we keep the buyers informed every time when they are entering the state of mind to purchase.

Posted by Irja Kujala (Coldwell Banker Bain) almost 11 years ago

David - We could have a very large list of things that could mess up. I was trying to stick to some pretty basic items for clients. I could see your point though if a person is in the process of disputing items. It can be quite a hassle.

Bruce - I think its good advice. :-)

Benita - Cars seem to be the biggest target for home buyers. Why do they seem to go hand in hand???

Christianne - Feel free to share this with others. It can't hurt to continue saying it when we are talking about the buyers that YOU deal with. They can never be reminded enough.

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 http://TexasLoanGuy.com) almost 11 years ago

Michael - I dont do loans in AZ so feel free to bookmark and share it with others. Hopefully your customers will listen and you can avoid some unnecessary discussions later.

Thank you Wanda!

Irja - That is a unique name. Keep them informed before they consider the purchase, then send them some fun literature (like this one) that reminds them not to purchase.

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 http://TexasLoanGuy.com) almost 11 years ago

John - You are absolutely correct.  I recently had a client who had to provide endless documents because he was transferring money from accounts and this definitely held up the approval process.

Posted by Michelle Gibson, REALTOR (Hansen Real Estate Group Inc. ) almost 11 years ago

Hi John, I am in agreement with your other fans ~ this article is well-written and I wouldn't mind sharing with others ~ reblogging.

Posted by Teral McDowell (Referral Patners LLC) almost 11 years ago

John, this is great info.  These are all areas where buyers need to be more cautious while waiting to close on their home purchase.

Posted by Tammie White, Broker, Franklin TN Homes for Sale (Franklin Homes Realty LLC) almost 11 years ago

Michelle - I have had a few of those customers too. Of course, its a pain in the neck with you need to provide all of that documentation. Usually they blame YOU for the inconvenience. HA

Teral -  Thank you for the reblog. I'm glad you enjoyed it.

Tammie - I know its exciting to get out and buy some furniture or get extra credit cards to 'plan the spending spree' (hopefully that is not really the case) but customers have to learn to take it in stride.

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 http://TexasLoanGuy.com) almost 11 years ago

I represented sellers on a deal where the buyers were playing a game of money shuffle... the guy wanted to make sure community property laws and common law marriage applied to him so he read up on a bunch of "stuff" and it said to combine all your accounts, close accounts, and make sure both names were on same account with same address, so he also moved out of his apartment and into hers just to use it as his resident address...

All this down a week before closing, so needless to say, we did not close on time...

Posted by Donna Harris, Realtor,Mediator,Ombudsman,Property Tax Arbitrator (Donna Homes, powered by JPAR - TexasRealEstateMediationServices.com) almost 11 years ago

maybe we need another disclosure that spells everything out not to do.............i love paperwork.

Posted by Dennis Blackmore (Creed Realty) almost 11 years ago

John, ☺ Congratulations on the Feature ★ Excellent advice for buyers and folks who work with them...

Posted by TeamCHI - Complete Home Inspections, Inc., Home Inspectons - Nashville, TN area - 615.661.029 (Complete Home Inspections, Inc.) almost 11 years ago

Hi John -- I have seen this past year where lenders keep asking for more bank statements to connect the dots, so you are right on the mark.

Posted by Chris Olsen, Broker Owner Cleveland Ohio Real Estate (Olsen Ziegler Realty) almost 11 years ago

Congratulations on the feature. Yeah, don't you just love the Adjusted Gross Income - AFTER deductions. Let me guess.... we all have to be honest for 2 years before we apply? ::clearing throat::: j/k kidding IRS!

Posted by Greg Nino, Houston, Texas (RE/MAX Compass, formerly RE/MAX WHP) almost 11 years ago

Well done John. I have heard many stories of folks that weren't told these things up front or didn't listen & went & bought something!  ARGH! 

Posted by Kristin Moran, San Antonio,TX - Real Estate - 210-313-7397 (Owner - RE/MAX Access - KristinMoran@Remax.net) almost 11 years ago

Congratulatons on the feature John. Great info to share with ours buyers.

Posted by Megan Izdebska & Hanna Manoufar Chandler, Scottsdale Real Estate Agent, Double Commitment. Double Results. (United Brokers Group) almost 11 years ago

Great list.  First time home buyers really need a lot of guidance and advice from us.

Thanks for sharing.

Posted by Linda Lipscomb, 731-695-1118, Lexington TN Homes (Linda Lipscomb RE/MAX Lexington Henderson County TN) almost 11 years ago

Donna - Thats a shame. Im sure he thought nothing of it at all. It was a hassle to produce the documents, which Im sure delayed the closing but at least you closed.

Dennis - Thats the last thing we need is another disclosure or notification to be signed. Good old fashion communication should work just fine here.

Thank you Michael. I appreciate it.

Chris - Lenders are just trying to make sure they are underwriting a good file. This is probably something they should have been doing for years. Now we just have to simplify our borrowers to make it smoother.

Greg - It always amazes me just how many deductions some people claim.  I received a file once where the person told me they made about $48,000 annually doing a Hot Dog Vending company (parties and events). When I received his tax returns and reviewed the Adjusted Gross, he banked just over $9000. Obviously I could not assist him. Honestly, the first thing I ask is 'why are you in that business?'. Well, thats what I think anyway. I dont really ask them that question. But they are shocked to know I have to use the Adjusted.

Kristin - It is so very common, if the customer is not told ahead of time.

Megan & Hanna - Glad you enjoyed it. Feel free to share.

You are very welcome Linda.

Posted by John Cannata, Texas Home Mortgage - Purchase or Refinance (214-728-0449 http://TexasLoanGuy.com) almost 11 years ago

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