Orange County first time home buyers need to be aware of what things they can and cannot do once they have an accepted offer on a home. Even when someone is "PreApproved" by an Orange County Lender, the approval can fall apart quickly if the home buyer is not careful.
4 Things Orange County Home Buyers Should Not Do While in Escrow
- Do not make any large purchases. Do not purchase a car or boat. Don't even buy furniture or appliances for your new home.
- Don't apply for new credit cards or installment loans. Inquiries during the loan process could lower the FICO score, which could cause problems if credit is run prior to closing.
- Do not make any large or unusual deposits into your checking or savings account that can't be properly documented. Even a $500 deposit may be questioned by an undewriter if it didn't come from an employer or obviously verifiable source. Cash deposits cannot be documented and will cause problems if deposited into an account the lender is using to document funds to close.
- Don't go on vacation or leave town during escrow closing period. While this is not a deal killer, it can cause delays. It typically takes 30 to 45 days to close a transaction, sometimes even longer. If the borrower is not available to get needed documentation or sign disclosures, the resulting delays could cause problems at the closing.
And of course, don't get laid off from your job! That, of course is out of your control but it does happen from time to time.
Fannie Mae will Soon Require a Second Credit Report Be Pulled At Closing
Fannie Mae has announced that effective June 1, 2010, lenders will be required to pull a second credit report at funding. The lender needs to make sure no new payments are appearing on the credit that would increase the debt to income ratios beyond an approvable level. They will be looking for new inquiries that did not appear on the initial credit report. While this could lead to deals falling out at the last minute, what is still unclear is whether lenders will adjust loan pricing at the last minute based on a drop in FICO score. For example, a borrower with less than 40% down payment and a 720 FICO score could end up with an additional .5 point fee ($2,000 on a $400,000 loan) if there FICO drops 1 point, to 719. There should be more clarity on this issue in the next week.
It is more important than ever that Orange County home buyers be very careful with their spending and credit while in escrow to purchase a home. Make sure to ask your local Orange County loan lender is what things to be careful about and don't keep any secrets.
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949-829-1846 | tstorm (at) ochomebuyerloans.com