During a typical 30-day escrow period, there is ample opportunity for a potential home buyer to unwittingly sabotage his or her deal. Until the keys are in the buyer’s hands, there are still several things that can cause a deal to unravel, even at the very end. Let’s take a quick look:
Credit Issues: These days, a buyer’s credit is monitored until the end. Not only will the lender find out if a new account is opened, but also if anyone else even inquired into the buyer’s credit after the lender’s credit inquiry. If the new furniture will require financing, best bet is to wait until the loan is closed. If the new home’s garage is incomplete without a new car, wait until the loan is closed!
Remember To Keep Your Paperwork Handy
Employment: Changing jobs during an escrow is always an obvious no-no. But sometimes internal changes can destroy the deal. Examples include being switched from an employee (w-2) to an independent contractor (1099), or compensation switching from salary/hourly to commission. And lenders will call to verify that the buyer is still gainfully employed right before they hit the big “fund” button.
Assets: Many conventional loan programs require a minimum amount of assets or reserves in the bank. Although FHA and VA loans do not have minimums, some loan approvals are given based on compensating factors such as money in the bank after closing.
A loan may be approved based on an older bank statement with a certain amount of cash in the account. However, the approval might require that the most recent account statement be provided. If the new balance is lower, this could jeopardize the loan approval EVEN if there is still sufficient money in the account to cover down payment and costs.
I think every loan officer has had a loan die, or have a closing significantly delayed, from one or all of the above. Properly prepping buyers at the beginning helps, but sometimes you can only do so much. Have to admit, these things keep the industry interesting.
