Things Not to Do Before a Real Estate Closing
You can learn the easy way that there are things a home buyer should not do before closing a real estate sale, or you can be like many other people and learn what happens the hard way. It is your choice. Learning the easy way that there are things a buyer should not do before closing means you will pay attention to the advice from your mortgage broker and your agent.
Or, maybe it's because buyers suffer from a temporary lapse in judgment. It's easy to do when stressed out over closing the sale of your home. A mortgage lender might suggest a simple course of action, and sometimes buyers misinterpret the assignment, and they do something else -- that something else which tends to delay the closing. When in doubt, ask.
Don't Do the Thing That Makes Common Sense
The biggest problem seems to stem from the fact that many first-time home buyers believe their intended actions are innocent, and they are certain it makes sense to them. It might make perfect sense but you can't trust that logic because it is very dangerous to presume that just because it sounds like the right thing to do, you should do it. The fact is it most likely is not the thing to do.
Mortgage rules and guidelines don't really make a lot of common sense except to the government committee that created the regulations. For example, a home buyer with a freeze on her credit report might be asked by the lender to temporarily lift that freeze. What the home buyer hears is something different. The buyer hears cancel the credit freeze. If the buyer cancels the freeze, it could cause a new credit report to be generated that could produce a lower FICO score.
In that event, a new closing disclosure would need to be drawn to reflect the higher mortgage interest rate. A 1/4 point jump from 4% to 4.25% on a $300,000 loan results in paying more than $15,000 extra over the term of a 30-year loan. Further, generating a new closing disclosure under TRID guidelines means the buyer will need to wait through another time period before loan docs can be drawn. Waiting for a second time period can delay your closing.
On top of this problem, some borrowers upon checking credit reports, find an item that is incorrect. The time to try to correct a problem is before you are in contract to buy a home, not during the contract period. But the error is glaring you in the face, right there on your computer screen, and all you have to do to dispute the error is to click the mouse. Don't do it. Don't touch the mouse. Disputing an error while in contract can also trigger another credit report which, in turn, could generate a new closing disclosure, and it is all downhill from there.
The List of Things Not to Do When Waiting to Close a Real Estate Sale
- Do not touch your credit report. Don't even look at it. You could make a harmless inquiry and end up delaying your closing. Accept the fact you are not a credit expert.
- Do not establish new credit. Cash-back cards offered out of the blue to you? Delete those emails, shred the reply forms or wait until after your transaction has closed to accept new credit.
- Do not close any credit accounts. Even if you realize that you never use a certain credit card, for example, cut it up if you must, but do not cancel that line of credit while you are waiting to close the purchase of your home.
- Do not increase the credit limits on your cards. Anything that is worth buying with a credit card is worth waiting for. If you get an offer in the mail, don't respond to it.
- Do not buy anything with a credit card or put an item on layaway. Nothing. This means not.one.thing. Yes, you might need a washer and dryer, but wait until you close to order it. Don't take a salesperson's word that they'll just write it up and hold it for you, because somebody will enter it into the store's computer by mistake and, voila, your closing will be delayed.
At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.