Don’t Do These Things While in Escrow

Dont do these things when in escrowI’ve seen this too many times.

As often as I try and warn my clients, there is always one or two that don’t heed my advice and do one of the things on this list. We don’t find out until we’re almost done with the loan (the lender does a final credit check right before closing), and all of a sudden, they don’t qualify for the loan anymore. Sometimes we can save it, but once in a while, there’s nothing we can do. It’s an absolutely horrible experience for all involved.

I’m going to say it again, in case you missed it the first time. The lender will do a final check on credit and employment to make sure that nothing has changed significantly. They do that to protect themselves. They are lending you hundreds of thousands of dollars – you better believe they will double check. So if your situation has changed, they will call you on it. I guarantee it.

Here is a list of things you SHOULD NOT DO while your loan is in escrow. In fact, it’s a good list of things not do to in the months before you get into escrow. It’s nothing major, and most of them are no brainers, but please read the list, bookmark this page, and refer to it during your escrow BEFORE you make any financial decisions.

Here we go:

  • Don’t Quit Your Job. I can’t believe I even have to write this one. Funny, isn’t it, that your lender is going to have a problem if you don’t have source of income. They are such sticklers for little things like that. Of course it’ll matter!! Even if you’re changing jobs, it will throw a wrench in the works and the very least, delay closing for a time.
  • Don’t Make Any Major Purchases. If we see new credit lines on your credit report (say it with me: the lender rechecks credit before closing), it may throw off your debt-to-income ratio. Now you may be ok, but you may not. If your DTI (debt-to-income ratio, you might as well learn the lingo) goes over a certain amount, well, no more loan. Always check with your loan officer (ME!) before making any major purchases.
  • Don’t Co-Sign or Add Any New Credit. Same as above, but adding on the co-sign part. Rule of thumb, talk to your loan officer before any major financial decisions And this includes buying new furniture or appliances for your new home before you close. After you close, knock yourself out!
  • Don’t Go on Vacation. I’ve had people leave the country a week before closing, and when I call them up to schedule the signing, well “We’re in Paris, we didn’t know we had to be in town to close.” No bueno. Let me know if you are planning on heading out of town, we may be able to make it work.
  • Don’t Make Any Large Withdrawals or Deposits into Your Bank Account. The lender needs to track where the money is coming from, or going to. They are very suspicious by nature. IF it happens, we will have to explain it to the lender with a letter of explanation. But make sure you have enough left in the account to close!
  • Don’t Pay Your Mortgage Payment. Well, don’t pay it without talking to me first. Here’s why. We get a payoff from your old mortgage company good for the closing date. If you pay off your mortgage late in the escrow process, it will mess up the numbers, and we have to ask for another payoff. That may take a while. Best practice is just to ask me first and I will let you know, yay or nay.
  • Don’t Make Any Financial, Employment or Credit Decisions Without Talking to Your Loan Officer First. Do this, and we should be ok.

 

That’s it. These are the Escrow Commandments that you should heed. As always, contact me with questions.

 

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Jesse RiveraMy name is Jesse Rivera. I’m licensed in the State of California and I live and work in beautiful Long Beach, CA. I can do loans for the whole state of California, but I specialize in SoCal, especially Long Beach, Los Angeles County and Orange county.

Working with a Mortgage Broker (instead of a bank or retail lender) has its benefits.

  • My rates are hard to beat. As a mortgage broker, I have a lot more flexibility on how I price loans, and often lower my compensation to get my borrowers a better rate, or money for closing costs.
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