Home buyers are not always fully aware of how to properly close a real estate sale and this can lead to problems. You can learn all about this easy way, or fall into the various traps and pitfalls and thereby learn the hard way. The easy way will involve listening closely to the advice and pointers provided by the qualified real estate agent or mortgage broker with whom you are working.
This is actually a fairly common occurrence and can happen when the home buyer loses sight of the bigger picture in all the excitement. The mortgage lender may suggest a specific approach, but the homeowner may end up doing something completely different. This small error can lead to a great delay when it comes to closing the real estate deal. The best thing a home buyer can do if they are not sure what to do next is ask.
Don’t Do the Thing That Makes Common Sense
The major reason this can happen and does happen so often is that inexperienced home buyers are often doing the thing that makes sense to them. Even though things might seem to work in a certain way or you believe you are doing the right thing, you will find that these kinds of assumptions lead to major problems. You simply can’t trust logic that says to act on assumptions as these are more likely to be wrong then right in these specific processes.
This is because the mortgage laws and guidelines in place don’t actually make sense either, except to the government branches that laid them down. For example, if a home buyer has a freeze on their credit, the lender may ask them to lift the freeze temporarily. But, the home buyer often hears something different. The home buyer may go on to cancel their freeze instead of just lifting it temporarily. When this happens, the new credit report will be generated to express a much lower FICO score.
When this happens, the closing disclosure will need to be drawn up again and it will reflect the higher mortgage interest rate. A mere ¼ increase will change a 4% rate to a 4.25% rate. On a loan of $300,000 this can mean paying an additional $15,000 over a 30-year period. Furthermore, TRID guidelines clearly state that a new closing disclosure can only be drawn in the next time period. But that’s not all.
While the homebuyer begins to check their credit reports more carefully they may notice an item or two that needs to be corrected and will begin this right away. But, No! There is a time to correct such errors and this is before you have entered a contract to buy the home, not while you are in the contract period.
Of course, this can be a tough thing to do when you are sitting in front of the computer staring at this annoying error and holding back the urge to solve the issue with a click of a button. Divert your attention, get up and take a walk even punch a pillow if it makes you feel better. But, if you try to correct the error now, you will initiate another credit report and this will mean another closing report is generated and the rest, as they say, is a kick in shin.
The List of Things Not to Do If Closing a Real Estate Sale
• Do not touch your credit report. Avoid even thinking about it. All it takes is a slip of the wrist and you could trigger a major delay. Just accept the fact that credit is not your line of expertise.
• Do not establish new credit. Wow! You’ve been offered a cash-back card! |That’s… terrible! Just delete the email, trash the reply forms and sit on your hands until the transaction has been completed, then you will find all those offers are still standing.
• Do not close any credit accounts. Even if you see that you have a few lines of credit that you are not using, don’t take action. You can cut up the plastic if you’d like, but don’t cancel the line of credit during the waiting process.
• Do not buy anything credit related. Nothing at all not even placing items on layaway. Yes, you need some new golf clubs and that Elvis Presley commemorative plate collection is beautiful – the salesperson even promised to just write it up and hold it. But, this is not the time. Besides somebody in the store will place the order into the computer and BANG, the closing is suddenly delayed.