Tuesday, April 22, 2014

The Cost of Opening a New Credit Account Before You Close

A couple of weeks ago, I was sitting in a Buyer's Closing. My clients were the sellers, but as a sellers agent, I like to attend the buyer's closings as well. And it's a great place to hand over keys. But that's not the point of this blog.

When the Closer (the person from the Title/Escrow Company that would be notarizing everything) got to the lender's form that essentially said the Buyer had not opened any new credit accounts, we got a little delayed. The closer said with a smile on her face, "You haven't opened any new credit accounts have you? You haven't bought furniture or a new car or anything, right?" And the Buyers smiled back and shook their heads and signed the form.

Then Mrs. Buyer said, "Would a charge account at Target count? It's only $200 and I did it to get the 5% discount." BRAAAAAAAAAKE!!!!! Everything came to a halt. Luckily, the buyers lender did show us just seconds after this admission. But closing couldn't move forward until the matter was figured out. The lender had to determine whether this little $200 credit account would be enough to put their funding in jeopardy. They had to review all their financials and verify balances on other accounts.

We were in jeopardy of loosing this deal. At the last minute this might fall through and we'd have to start all over again with selling the house. Luckily within about 10 or 15 minutes everything was straightened out and that was the only glitch we had during the closing.

If you are buying a home and have an accepted offer - so you're Under Contract - DO NOT OPEN ANOTHER CREDIT ACCOUNT! It does require you to be very good and diligent for 30 to 60 days. But imagine the heartbreak if that $200 was enough to loose financing on the home.

For more information about how to buy a home, check out Eight Steps to Buying a Home

And as always feel free to visit www.Shellyn.net anytime for more great resources.