Don’t Get Surprised

By Allan Salter and The Sherman Team

There are certain times where it’s good clean fun to be part of a surprise. But in the Real Estate lending world we want to avoid these at all costs, which is why we put service and communication above everything else to ensure the homebuying process is a smooth experience. If there’s something you guys need help with or if you’re not ready right away, we want to help you through it. So for this installment of the Ultimate Pre-Approval Cheat Sheet, we got together with Allan Salter with Mac 5 Mortgage to put together some of the biggest surprises he’s seen from the lending side and how to get past them.

Co-signing for someone else on something.  

Most of us have been there.  A close friend or family member might approach you and ask something along the lines of:”Hey, I really really like/need this car/set of furniture etc and I was wondering if you could co-sign for me…”  

It’s always difficult because the good Samaritan side of us wants to err on the side of helping a good friend or family member. But the reality is we need to think long term about doing something like this because if buying a house is in your future plans, co-signing on a loan will heavily affect that.  You have to think about realistically if the person you’re co-signing for is going to be good for paying the debt back.  If they default on a loan that you co-signed, it affects your credit score very negatively and you would be held liable for paying it back just as are.  Even if they are diligent with their payments, the loan you co-signed for is going to appear on your Debt to Income Ratio and if you want to buy a house in the near future, you would need to get a complete previous 12 month history of the person you signed for making the payments from their bank account.   

Using a Credit card while under contract on a house

When you get pre-approved and when you get your offer accepted on the house you’ve decided on, this is not the end of the process. Between the acceptance of your offer and the day you close is when you have to be the most careful and here’s why:

The credit balances that were pulled the day you got pre-approved cannot increase between then and through the time you are under contract on your home. If you continue to use your credit cards during the stage that you’re under contract, that can have some heavy effects.   For every real estate mortgage there is a “soft pull” of your credit done that is Federally required between 2 days to 10 days before closing. All of that information is subject to change should you continue to increase credit balances.  It could even run the risk of you no longer being able to qualify for the house at only 2 to 10 days before closing.  

So the easiest remedy for this is to ask ask ask before doing.  It is never ever a bother no matter how many questions you have. 

Beware of other creditors trying to get in touch with you

This inevitably will happen during the pre-approval part of the process. What happens is companies buy credit reports and then will try to get in touch with you with promotions such as one that we already blogged about in regards to 6 months no payments or no interest.  Only take any offer like that after you close and have your new home key in your hand, never ever do it before. 

Again, when in doubt, ask ask ask.  

Obviously this is just a small sample of surprises to be aware of, so if you guys ever have any questions, don’t ever hesitate to shoot us a message or give us a call. We also shot a video with Allan where he explains all of this below: