Do you want to know what buyers should not do before closing on a house? Buying a house might be the biggest financial decision of your life. There are plenty of things to do, but what should you not do before closing? That’s what we’re gonna talk about. It’s Eric Sztanyo from Keller Williams Realty and Team Sztanyo.com where we are helping you find your home and strengthen your family. We’re here once again with Geoff Bostick from Guaranteed Rate, our local loan officer extraordinaire! Let’s talk about what buyers should not do before closing on a house.
Tips from the Pros
Eric Sztanyo:
Alright! So, we’ve done a few videos. We’ve talked about the pre-approval process, we’ve talked about interest rates and how those impact, your purchasing power and, and buying a house. We’ve talked about how can a lender help you win. But this time we wanna talk about what are the things you shouldn’t do in the loan application process. I’m sure you have a few good stories here.
Geoff Bostick:
Yeah, we can come across a few things, but we’ll give you some feedback.
The biggest thing we’ve seen lately in terms of what you should not do before closing on a house is job changes. And think the market right now, I’ve seen a lot of figures that there are a lot of people just not happy with their jobs. And so they’re looking for the grasses greener and that’s great. I’m never discouraging somebody. When you’re looking for that next job, first- communicate with your lender. Make sure they know. The last thing we want is to get everything teed up for your preapproval, for your house buying based on your now job only to find out you take a new job. That might impact the ability to qualify. Now, if you’re moving in the same industry, you’re moving from salary, job to salary job, probably not an issue. And like I said, it’s all about communication. If you tell us, Hey, I’m gonna change, we’re gonna tell you what we need.
Eric Sztanyo:
We don’t like, surprise, “surprise, I just changed my job.” Like at the closing table.
Geoff Bostick:
If you go from a salary job to a commissioned job or decide that you want to quit your job and go open a bakery or some sort of self-employed job, that would be detrimental to your ability to buy a house. So I would strongly encourage close on the house, then go chase your dream. In that order.
Eric Sztanyo:
And just ask. Ask how that’s gonna impact you either way. If you’re thinking about a big change of decision like that. Now, what about if a lot of people who watch this channel are from out of state and they’re thinking of moving here, what if you’re relocating for sure, how does that impact the loan? Is there anything you should, or shouldn’t do?
Geoff Bostick:
So people relocate for one of a few reasons, they’re either coming here for a job that’s local or they’re coming to be close to family or spouse is doing that, but they might be able to maintain their current job. So if you’re maintaining your current job, we just need to verify that you’re able to work remotely. That’s usually pretty simple to get from your employer, but we do have to get that. I can’t have your word for it. Especially if you were working like in an office and that’s where the employer’s address was and now you’re moving, we do need to verify.
Eric Sztanyo:
Is that just a letter?
Geoff Bostick:
Letter from either manager, HR, payroll, or someone like that. It can even be an email. Like we don’t have to have letters anymore. So we’re great with that. Otherwise, if you are accepting a new job, so great news is you do not have to have started a new job. I don’t need pay stubs for a new job. All I need is an offer letter. And you do need to start that position within 90 days of a closing date.
Eric Sztanyo:
Okay. Do they, do they check in on you? How does that happen?
Geoff Bostick:
They don’t check in afterward. Always. There are a certain amount of audited files, so it could happen. We’re like, Hey, can you send us a pay stub? And I’ve actually had that happen where somebody did not start at the job that they had closed with. They had taken a new job. So we just got that.
Eric Sztanyo:
Didn’t take the loan away?
Geoff Bostick:
We actually don’t take the loan away. No. So once we sign someone’s on the hook for the loan. Right? Yeah, so it’s not an order of that, but there is a saleability to that loan. When banks lend money, they don’t lend their own money. They actually do at first, but then they get paid back by Fannie Mae and Freddie Mac. And so if Fannie Mae and Freddie Mac say, did that guy start his job? Then we’re like, Hey, we need to pay stub. We get a pay stub. Or if it’s not there, they’re like, that’s not a saleable loan, we’re gonna take it.
Eric Sztanyo:
Remember, People are lending their money to you, so they want to find the stuff. Okay, so let’s go on. Not that any of you guys are boneheads, but what are some other bonehead things that you’ve seen or that you shouldn’t do during the loan application and approval process?
Geoff Bostick:
Yes. So new credit is always the biggest thing that I see. And more often the job is they need to open a new account, they need to buy a new car, they’re in line at the retailer and it’s Christmas time and they say, Hey, do you want to save 10 or 20% off your purchase? And inevitably people forget, oh, I’m buying a house or is this gonna impact me? And as we were talking, these are not detrimental things most of the time, they could be, but, most of the time these are not detrimental things that are gonna impact your purchase. They’re just gonna add headaches to you. And it’s extra documentation cuz we have to qualify all of your debt that you have and do to use that to qualify for your house. And so if you bought a new car, if you opened that new charge account, if you did something to add new debt, we need to verify.
Eric Sztanyo:
Another thing you should not do before closing on a house Well, you said you see a lot of these at Christmas time. Like always you’re in line at Target, you’re in line at Old Navy, old Kohl’s, whatever. And I can say 10% of my purchase today? It can be appealing, but you forget that you’re buying a house and now you just ruined it. So I hope the 10% was worth it.
Geoff Bostick:
Yeah. I hope you can sleep in whatever it is that you bought <laugh>. Now, it’s just a matter of documenting what it is. But if our goal is to help you avoid headaches, we want this to be a smooth process. Right? We want it to be enjoyable for you. I don’t like having the call and ask you to find the receipt statement that they gave you at the checkout at Kohl’s saying, you know, Hey, you’ve got a $500 credit limit. I don’t want to ask you for that. And you probably have it in the bottom of your purse or you know, in the garbage can at this point.
Eric Sztanyo:
So it probably won’t ruin everything, but it’s a headache. It’s a pain.
Geoff Bostick:
Big headache. And if you can avoid that during that timeframe. So most of the time we don’t run a new credit check, but, every lender that I know these days is doing something called debt monitoring. They see if a new inquiry’s been made. If a new inquiry is made from the time you apply to the time you buy. They are asking did you open new credit there.
Eric Sztanyo:
I remember as a teenager and young 20 something, see if you guys remember this. Going to Reds games. At a not Great American at then Synergy Field. I think probably when they cut out the wedge, like to bill a Great American and they, you know, the credit card people will be there every time and you could get like a floppy red hat. I probably had like seven of those floppy red hats <laugh>. Cause I was just like, Hey, this is free! This is amazing. Yeah. I get all these stupid gifts and having no idea like that I have like 15 red cards open <laugh>. I never used any of them. But I was like free red’s floppy hat, free gear. Comment below if you guys have a floppy red hat from the early 2000’s in your closet somewhere.
Okay. What else should we look avoid here? What not to do?
Geoff Bostick:
So we laugh about the new debt. The one thing I would say, there are major purchases that you need to make if, you know, your car breaks down and you have to get a new one or a lease is expiring and you need to do something there. We’re not trying to limit your ability to live life. Right. But just check in with us because if you take on more of a payment than what you can afford with buying a house, you might end up living in that truck you bought. So make sure that you are communicating that, that we’re kind of setting you up. If you’ve got a payment right now of $500 and your an auto loan and you go and buy another one with the same payment, we already qualified you with it. And so if something does happen, it happens where someone has gone through an accident, they have to get a new car. Like those things have occurred in the middle of a purchase. Right? Yeah. So sometimes these things do happen. Life happens but communicates with us. We’ve also had people take out too much of a loan and now they don’t qualify. So now we might need a co-signer. We have to restructure, they have to put more money down and so we don’t want to impact your ability to purchase because you didn’t communicate. So debt’s just a huge one
Eric Sztanyo:
And it’s not like you can’t buy the car in 20 more days or whatever. You know. Just realize that like you’re kind of under scrutiny during this period, this process, this short amount of time, this underwriting process and they’re being alerted of anything you’re doing. So just be careful. Be aware of that and don’t do anything crazy. Sure. Or ask first. Like, can I do this?
Geoff Bostick:
Yep. Okay. Another one, that we do see sometimes is making sure you’re staying on top of all your payments. We don’t often need a new credit report, but if you’ve been shopping for a little while and maybe your credit report’s three or four months old, we’re gonna need a new one before we get to closing. Cause they do have an expiration date on ’em. And what we don’t want to have happen is your credit was perfect or flawless or good enough at the time of pre-approval to then you didn’t see the Macy’s card that you forgot to make a payment on. And now it tanked your score a hundred points. It’s gonna impact your interest rate, it’s gonna impact your ability to borrow. So make sure you don’t miss any payments during , you don’t wanna miss payments anyway. But especially during the home buying process, stay on top of your payments, keep your credit top notch.
Eric Sztanyo:
Because ultimately it’s gonna be more time, more hassle and potentially more money on you if your credit score’s dipping. And that absolutely results in the terms of the loan.
All right. So we hit changing jobs, taking out new credit cards, purchasing a new car or something on credit, and missing payments. Is there anything else we should talk about or what not to do in this conversation?
Geoff Bostick:
Yeah, one thing and we didn’t talk about this before, but moving money, that’s a big one. So down payment has to be verified between 30 and 60 days before a closing on a purchase. So where that down payment money’s coming from, don’t start moving large amounts of money that we can’t source. Don’t accept gifts from family that is not gonna be able to be sourced. Make sure that money that is verified for the down payment we know about and that we do a great job on our team about vetting this out upfront. But for tips for people that are what if you’re accepting that gift from a parent or loved one for a down payment? How, how should they handle that?
Geoff Bostick:
So talk to your lender first. What we encourage on most transaction types is don’t take that money and put it in your account just because then we have to paper trail exactly where it came from. Most of the time what we encourage is the parent or donor, whoever that is, grandparent, aunt, uncle, they’re gonna fill out a letter just saying that money is a gift and it’s not required to be repaid. And then we ask them to send that money direct to the title company that’s handling the closing. That just cuts out so much paperwork. It makes everything simple. But if you are liquidating money, if you’re, you know, selling some Bitcoin to put for your down payment and, you start to have these large transfers in, we have to verify where it all comes from. And so if it’s not documentable, don’t sell a car that doesn’t have a transfer of title kind of thing. These are things that I’ve seen have occurred that have been difficult to document. So make sure you have your money set up. It’s all there. Don’t just start transferring or depositing cash. We can’t verify the mattress money that you have like sitting in a safe.
Eric Sztanyo:
The stories you could tell, I’m sure.
Geoff Bostick:
Yeah. So fun. But, yeah, don’t start moving a lot of money. And that’s, that’s probably one of the biggest pitfalls.
Help in Buying a House with Team Sztanyo!
Eric Sztanyo:
So guys, when you’re buying a house, it helps to have a team, some people with some experience. There are all kinds of things that you have to do. Hopefully, this was helpful for you in what not to do when you’re buying a house, we’re trying to make this process as seamless, as smooth, as enjoyable as it can be for you because buying a home is fun, but it’s also can be really stressful. Yeah. And, it can be a headache. So we try to make that process smoother, and enjoyable so that you’re in the right home and you’re super happy with the process.
Geof Bostick, thanks for joining us. We kind of did a little mini-series here. We covered some ground and they’re probably posted over a few months, but that’s okay.
Geof, if people wanted to reach out to you, ask more questions. What’s the best way to contact you?
Geoff Bostick:
I’d love to hear from you. Call or text at (513) 633-0504 or hit up my website and all of our contact info information is on there. That is rate.com/Geoff Bostick.
Eric Sztanyo:
Awesome. Well, thank you so much for joining us. Lending your expertise. It was awesome. As you guys know, if you want to work with Team Sztanyo, you can email me directly at eric.sztanyo@kw.com. Thanks for being a part of the Sztanyo Clanyo. I think we can officially nominate Geoff as part of the Sztanyo clan now.